The Enhanced Dai Financial Savings Fee (EDSR) will be implemented, as decided by the Maker DAO group. Voting through GOV12.1.2 was conducted, and the results will momentarily boost the effective DSR available to customers in the early bootstrapping period when DSR use is low.
According to a post on the Maker DAO discussion board, the EDSR decreases over time as utilisation rises because it is mostly reliant on the DSR and the DSR utilisation fee. It declines and eventually vanishes as utilisation rises.
On July 19, 2023, a Maker DAO participant known only as Rune presented the EDSR proposal. As a one-time, one-way short-term mechanism, he described the EDSR. That implies that the EDSR is only capable of declining gradually. Even with a decrease in DSR utilisation, it cannot get much better.
Rune stated in the proposal that they were able to stabilise the entire Dai supply. After setting the DSR to be one of the highest values in decentralised finance (DeFi), that was potential. However, they might not lead to long-term growth in terms of fresh demand and capital inflows.
According to Rune, the main goal of the proposed EDSR is to help fix the DSR’s relatively low adoption price. In order to achieve this, it makes sure that the Dai holders who are driving DSR adoption will benefit significantly from the higher profits the protocol would produce.
Rune thinks the new proposal, if implemented, will encourage Maker DAO adoption and force other DeFi protocols to swiftly incorporate the DSR. Due to the enormous cognitive switching costs of DeFi, the majority of Maker DAO’s users would continue to use the protocol even in that case.
Since rebounding from the $511 low on June 10th, Maker DAO’s native token, MKR, has been in a significant rally. The token for the DeFi system increased by about 150% and was trading at $1,230 at the time of writing.
