MakerDAO finally lowers its stability fee as Dai overshoots peg

MakerDAO token holders voted to decrease the stability fee on the Dai stablecoin by 2 percent to 17.5 percent.

The MakerDAO platform offers collateralized loans in the Dai stablecoin to users who deposit ether into its smart contracts.

Dai has consistently traded below its peg since January.

Voters can choose to lower the stability fee to gain cheaper CDPs at the risk of Dai's peg floating but if expectation holds more influence than the fee then it may be a good bet.

The MakerDAO platform consists of three parts: the MakerDAO token, the Dai stablecoin, and collateralized debt positions.

Dai is a cryptocurrency that aims to maintain a one-to-one peg with the U.S. dollar; CDPs are the smart contacts that enable users to deposit ether and create Dai.

The stability fee acts as a counterweight to balance fluctuations in the supply and demand of Dai and maintain its peg to the U.S. dollar.

If users create too much Dai then the price of Dai should fall below its peg with the dollar.

Raising and lowering the stability fee helps control the amount of Dai being created and helps prevent wild fluctuations in the supply-and price-of Dai.

MakerDAO CDPs currently hold 1.64 million ether-roughly 1.5 percent of the total supply at the time of writing-making Dai the most popular service in decentralized finance.