DAI Stablecoin's Stability Fee Nears 20% After Latest MakerDAO Vote

The dollar-pegged stablecoin DAI is still trading below one dollar but is now considered to be in a "Stable" position.

From 0.5 percent to now 16.5 percent, the Stability Fee has been increased 33 fold over the past three months.

Since February, token holders behind the primary lending platform for DAI issuance - MakerDAO - has been increasing what is called the "Stability Fee" in efforts to make DAI loans more expensive.

The aim is to retract market supply of DAI and push DAI price up to dollar valuation.

MakerDAO will also hold millions worth of other cryptocurrencies outside of ether through an ambitious upgrade to introduce what is called "Multi-collateral DAI." For now, the stablecoin DAI is solely backed by native ethereum cryptocurrency, ether, and has a fixed supply cap of 100 million.

Given a persisting imbalance in DAI supply and demand, certain community members have advocated in the past that the supply cap on DAI be reduced as an additional measure to the Stability Fee increases.

As stated by Vishesh Choudhry of the MakerDAO Foundation Risk Team, consecutive Stability Fee increases do seem to be having a measurable impact on DAI price which presently sits between $0.97 and $0.98.

"What we've really seen is that as we've increased the Stability Fee over the past few weeks, the DAI price has stabilized a bit," said Choudhry during today's call.

Cyrus Younessi - risk management lead at the MakerDAO Foundation - agreed saying that it seemed like "We're headed in the right direction" and that perhaps more consideration should now be given over when to halt Stability Fee increases.

"When do we know the peg has been fixed? What kind of indicators are we looking for?What's the amount of time we're comfortable observing DAI trade around $1.00 before we consider corresponding changes?".