MakerDAO Votes to Increase Fees 4% on Ethereum Stablecoin DAI

MakerDAO token holders have again voted to increase fees charged to those taking out programmatic loans on the blockchain through its U.S. dollar-backed ethereum stablecoin DAI. The fourth and largest fee hike to the DAI "Stability Fee," users who take out loans with MakerDAO to generate new DAI will soon be required to pay a 7.5 percent fee when closing out the loan.

As explained in the MakerDAO white paper, the Stability Fee "Is an annual percentage yield that is calculated on top of the existing debt" and funneled into a smart contract called the "Burner."

The purpose of the fee is strictly to address imbalances in supply and demand of the DAI token that cause its valuation to stray away from the dollar.

Since February, DAI's valuation has persistently fallen short of $1, and as MakerDAO's head of trading Joseph Quintilian noted during a governance call last Thursday, over-the-counter trading for the DAI persists between the $0.95 and $0.99 range.

During Thursday's scientific risk and governance call, risk management lead at the MakerDAO Foundation Cyrus Younessi highlighted that last week there was an initial boost to DAI market price - likely as an outcome of the 2 percent increase to the Stability Fee - but prices again have retracted to below the targeted $1 valuation.

By raising fees, MakerDAO token holders hope to cause a contraction to the DAI supply relative to the continued demand and thereby push the dollar peg up to a steady $1 valuation.

Looking ahead, MakerDAO token holders will vote to ratify the decision and execute the 4 percent Stability Fee hike into the protocol.

During last week's executive vote to implement a 2 percent fee raise, MKR holders were able to ratify the increase in roughly 10 hours with a total of 37 votes.

About this initial round of polling, Richard Brown - head of core community at the MakerDAO Foundation - noted today that "More active voters than the previous executive vote we had.".

Of the total MKR tokens staked, 75.6 percent were staked in favor of the 4 percent raise.