- The MakerDAO community has concluded a poll to introduce the Enhanced Dai Savings Rate (EDSR).
- The EDSD would temporarily boost the interest rate for DAI stablecoin holders to as much as 8%.
- The DeFi lending protocol is aiming to increase the adoption and circulation of DAI with EDSR.
The MakerDAO community recently passed a governance vote that sought to introduce the Enhanced Dai Savings Rate (EDSR). The EDSR is a mechanism to temporarily boost the rewards for DAI stablecoin holders to up to 8%. The governance vote came amid declining market share and circulation of DAI.
On July 19, MakerDAO founder Rune Christensen published a proposal on the protocol’s governance forum, highlighting the need to increase rewards for DAI holders. According to the proposal, increasing the stablecoin’s yield would help the DeFi lender generate sustainable growth in new demand and capital inflows.
The governance vote concluded with more than 99.9% of the votes cast in favor of introducing the EDSR. The proposed changes will be merged into MakerDAO’s Stability Scope Framework, followed by a potential executive vote within the next 30 days. Christensen told the community that the most important short-term goal for the DeFi lending protocol was to grow the demand for the DAI stablecoin.
The EDSR is aimed at increasing the circulation of DAI and incentivizing the stablecoin’s users to hold it. DAI’s circulation has declined by a third over the past year, with year-over-year trading volume down more than 70%. The stablecoin had a trading volume of more than $700 million this time last year. At the time of writing, the 24-hour trading volume stood at $66 million.
MakerDAO currently offers a DSR of 3.19% and the potential DSR of 8% represents a jump of over 150%. Once the EDSR comes into effect, the DeFi lending protocol would redirect a larger proportion of its revenue to reward DAI holders. Last month, MakerDAO made a similar move when it increased the DAI savings rate from 1% to 3.49%, in a bid to present DAI as a more attractive stablecoin than rivals like USD Coin and Tether USD.
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