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DSR: Dai Savings Rate – Earn Interest with Your DAI

DSR: Dai Savings Rate – Earn Interest with Your DAI

The Maker Foundation announced at Devcon5 that Multi-Collateral Dai is coming November 18th, 2019. This means that you will soon have the opportunity to earn interest with your DAI. It’s all thanks to a new feature coming with Multi-Collateral Dai called the Dai Savings Rate, or DSR for short.

Dai Savings Rate (DSR)
DAI’s new symbol

What is the Dai Savings Rate (DSR)?

The Dai Savings Rate is a mechanism for the MakerDAO to control the demand side of the supply and demand equation by offering an interest rate for locking in some of the total DAI supply. Up until this point, MakerDAO only had the ability to directly affect the supply of DAI through the stability fee it charges CDP holders.

How does it work?

Once live, DAI token holders will have the option to lock their DAI into Maker’s DAI Savings Rate contract and earn a variable interest rate in DAI. The DAI necessary to pay the DSR contract is taken from the stability fee pool. If the pool ever runs dry, the Maker contract prints new MKR to cover the debt. Ultimately, it’s up to MKR holders to properly govern the rate and ensure the system runs smoothly.

A recent DSR update discussed some of the challenges in governing this new component of the MakerDAO system.

How much will I make for locking in my DAI?

The rate is not set in stone like the stability fee its controlled by MakerDAO token holders. However, we can assume that the DSR can never be greater than the stability fee. And, the current stability fee is 10.5% (subject to change with MCDai). We can also look towards existing secondary lending markets which currently offer around 8% APY to get an idea of what would be competitive.

MKR Holders, don’t forget to vote for MCDai on November 15th. Stay tuned for more details about Multi-Collateral Dai and how to start earning with the DSR!

How will Maker introducing the DSR affect secondary lending markets like Compound and bZX? Stay up-to-date on the world of DeFi by following us on Twitter or come chat us in our Discord.


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