- #MakerDAO raised DAI's deposit rate (DSR) from 3.19% to 8% via the EDSR mechanism to boost DAI growth and demand.
- #DAI now has the highest yield among stablecoins, surpassing money market yields and decentralized exchange LP returns.
- The DSR increase caused DAI to rise from $340 million to $1.18 billion in total amount.
- The change led to increased DAI minting through Maker Vaults, reversing a supply decline.
- This expansion has financial implications; Maker's annual operating cost is estimated at $54 million due to the 8% DSR.
- Projected annual #profit decreased from $84 million to $23 million, seen as a customer acquisition cost.
- The EDSR mechanism is sustainable, with rates varying based on DSR utilization: 8% when 0-20%, 5.58% when 20-35%, 4.15% when 35-50%.
- More DAI minting leads to Maker earning more interest than paid for DSR, but increasing DSR deposits pressures profits.
- Sustainability relies on reaching the 4.15% EDSR level.
- The new DSR mechanism offers an attractive yield alternative compared to US Treasury bonds.
- DSR utilization likely stabilizes below 35%, similar to the 5.5% Treasury bond yield benchmark.
- The goal is to drive Maker's growth and introduce Maker SubDAOs to increase DAI and MKR #token #demand and utility.