DeFi’s Central Bank MakerDAO Relaunches 1% Fixed Yield for DAI Holders

MakerDAO is bringing back a fan favorite: The DAI Savings Rate. 

First launched in 2018, the DSR lets users deposit the project’s native stablecoin DAI into a smart contract and begin earning interest on their holdings. The interest has been negligible for some time, however, earning users just 0.1%. 

DAI is MakerDAO’s decentralized dollar-pegged stablecoin. It’s backed by a combination of decentralized assets (i.e., Ethereum, Wrapped Bitcoin, etc.) and centralized ones (i.e., Circle’s USDC). It’s the sector’s fourth-largest stablecoin by market capitalization, per CoinGecko.

Now, though, following an executive vote passed on December 11 and executed on-chain today, the protocol’s interest rate will rise to 1%. Members of the MakerDAO governance ecosystem were given the option to vote on leaving the rate at 0.1% or raising it anywhere from .25% to 1%. 

The move to increase the rate by 100 basis points earned a majority vote of 71.25%. A total of 77,599 MKR tokens, MakerDAO’s governance token, were used in the vote. 

Alongside the increase in the protocol’s interest rate, the vote also effectuated the launch of a new vault type to mint more DAI tokens using Gnosis (GNO) as collateral, offboarding the RENBTC vault type, and various MakerDAO Open Market Committee parameter changes. The parameter changes revolve primarily around the amount of debt different vaults can safely onboard.

Twenty different “recognized delegates” within the ecosystem will also earn 103,230 DAI for their governance work.

MakerDAO, the ‘Endgame’, and RWAs

The reason the protocol can afford to raise rates this much is thanks to new revenue generated from so-called real-world assets (RWAs).

As part of Rune Christensen’s, Maker’s founder, Endgame Plan, the protocol has made a hard push to create new money streams from some of its idle holdings. One such stream comes from RWAs, which are assets untied to the world of crypto. 

The Endgame Plan is a three-part proposal to firm up MakerDAO against regulatory capture. First proposed as a response to authorities’ blacklisting crypto mixer Tornado Cash, Christensen wants the protocol to generate as much money as possible via all means in order to convert to Ethereum.

Ethereum, unlike RWAs or Circle’s USDC, is far more difficult to halt should authorities turn their gaze upon the crypto bank.

For example, the MakerDAO community voted to deploy 500 million DAI to buy up U.S. short-term Treasuries and bonds from BlackRock. The protocol is also generating revenue from a tie-up with Gemini and its native stablecoin called GUSD. In exchange for holding 100 million GUSD, Gemini will pay Maker 1.25% in annualized interest.