"Lie earning" 8% DAI savings rate MakerDAO has attracted nearly 700 million US dollars

Author: BitpushNews Mary Liu

According to Dune data, MakerDAO has attracted nearly $700 million in funds after MakerDAO raised the DAI Savings Rate (DSR) from 3.3% to 8%. use.

Since the rate hike, DAI deposited into the DSR has tripled to over $1 billion.

DAI now offers the highest rate of return among stablecoins, which is better than the rate of return of various money markets and DEX LP returns. Many crypto celebrities have also participated in it. Data on the chain shows that the wallet of TRON founder Justin Sun has converted more than 90,000 stETH into 77.8 million DAI, and deposit it in Maker, calculated at an annual rate of return of 8%, can easily earn more than $10,000 a day.

The last time Maker raised the savings rate was in May, from 1% to 3.3%. With Curve and Aave's new stablecoins entering the market, this move is to stabilize DAI's stablecoin market share.

Both Curve’s crvUSD and Aave’s GHO allow users to deposit stablecoins against yield-generating protocols, meaning users can continue to earn passive returns while accessing stablecoin liquidity against their holdings.

Thus, raising the DSR allows DAI to compete for market share with its upstart rival, the Spark protocol, a fork of the Aave v3 lending protocol that launched in May with support from MakerDAO. A DAI-centric money market also creates new use cases and yield opportunities for DAI holders, allowing savers to access DSR and take out loans against DAI collateral.

Aave DAI market volatility

DAI rates on top money market protocol Aave v3 have fluctuated wildly in recent months.

From February to mid-June, DAI borrowing fees stabilized between 2% and 4%, with peak increases of up to 10%. On July 13, the rate spiked to 31% and hit 26% twice before the end of the month.

Rates remained volatile during the first week of August and appeared to be rising again.

The rise of Spark could provide stablecoin holders with an alternative source of income, exacerbating volatility in Aave’s DAI market.

**Is the strategy sustainable? **

According to a report published by Delphi Digital, this strategy has significant financial implications. With the DSR currently set at 8%, Maker's annual cost is estimated at $54 million. Therefore, this would reduce Maker's projected annual profit from $84M/year to $41M/year. Nonetheless, it can be seen as a customer acquisition cost to rekindle DAI demand.

In simple terms, the EDSR is based on a 3.19% multiplier of the DSR base rate, analysts said. This ratio shrinks as DSR utilization increases, capped at 8%:

0-20% = 3x DSR = 8% 20-35% =1.75x DSR = 5.58% 35-50% = 1.3x DSR = 4.15%

As more DAI is minted, Maker will earn more interest on the newly minted DAI than it pays on DSR. However, as DSR deposits increase, this dynamic will put pressure on Maker's margins, leading to lower profitability unless the 4.15% EDSR level is met.

Delphi Digital believes that the enhanced DAI DSR offers an attractive on-chain alternative to U.S. Treasury bills. Given its high yield, DSR utilization is likely to stabilize below 35%, in line with the current Treasury rate benchmark of 5.5%. This strategic move is intended to advance Maker's growth and lay the groundwork for the introduction of the Maker SubDAO, which aims to increase the demand and utility of the DAI and MKR tokens.