The past few weeks have seen the weekly Base Rate poll continue to vote in 0% while the peg remains above $1. This is problematic because it undermines the core promise of Maker in exchange for compensating MKR holders for risk. I am urging MKR holders to consider voting in a negative Base Rate to help restore the peg to $1.
As a reminder, voting in a negative Base Rate does NOT imply that any Stability Fee will end up negative. The Stability Fees are defined as:
Stability Fee = max(Base Rate + Risk Premium, 0%)
For example, if we vote in a Base Rate of -1% then ETH-A’s Stability Fee will be:
ETH-A Stability Fee = max(Base Rate + ETH-A Risk Premium, 0%)
= max(-1% + 0%, 0%)
= max(-1%, 0%)
since 0% is greater than -1%.
There is nothing special about a Base Rate of 0% other then it is the point where MKR holders start subsidizing the risk premiums, but we are already doing that with ETH-A anyways.
If your concern is to be compensated for the collateral risk exposure, then I urge you to reconsider as growth and trust of the protocol is of paramount importance at this stage. I don’t believe it is worthwhile to be concerned about earning a 1-4% risk return on the current Dai supply when we could be looking at billions (trillions?) of Dai being issued over the next decade. It is very common for start up company shareholder’s to be tolerant of all sorts of risk at the beginning because the dominant risk is almost always that the product will fail altogether. I know we are a DAO, but I think the analogy works.
Anyways, this was a bit of a rant. I hope I changed some minds, but if not please explain why you want to keep the Base Rate at 0%.