MakerDAO Voters Support Raising Ethereum-backed Loan Interest Rates to 7.5 Percent

MakerDAO, a decentralized autonomous organization that provides crypto collateralized loans, polled its community on whether to increase interest rates and by how much.

The community voted to increase rates by the maximum that was proposed, 4.0 percentage points, raising rates to 7.5 percent.

MakerDAO polled its community, beginning Mar. 17th, on whether to raise rates by 0, 2 or 4 percent.

The vote to increase rates by 4 percent won by a large margin, with voting completed on Mar. 21st. The vote is a continuation of three recent rate increases in an attempt to curb its Ethereum-backed stablecoin, Dai, from trading below its $1.00 peg.

To repay the loan and retrieve the locked Ethereum the user must repay the Dai they received in addition to a stability fee, an annual interest rate charged to borrowers to compensate participants who maintain the stability of the system.

In these circumstances, the stability fee is adjusted up to encourage borrowers to repay their loans-increasing the price of Dai as it is taken out of circulation for loan settlement-or adjusted down to encourage Ethereum holders to obtain loans, increasing the supply of Dai and decreasing its price.

One of the advantages of Maker, when it started, was its highly-competitive annual interest rate of 0.5 percent.

In February, the holders of MKR voted to increase interest rates twice, raising interest rates from 0.5 percent to 1.0 percent, then to 1.5 percent.

Rates were raised again on Mar. 8th to 3.5 percent.

On Mar. 22nd the MakerDAO will issue an "Executive Vote" among MKR holders to determine whether to execute the 4.0 percent rate increase, raising interest rates to 7.5 percent.