MakerDAO whale with 94% voting power reduces Dai stability fee by 4% 🚨 This article is 5 years old...
MakerDAO whale with 94% voting power reduces Dai stability fee by 4%
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Updated: Feb. 20, 2022 at 2:37 pm UTC
Cover art/illustration via CryptoSlate. Image includes combined content which may include AI-generated content.
A MakerDAO token holder almost single-handedly decreased the stability fee on the Dai stablecoin by 4 percent, as he held 94 percent of the voting power for the proposition. The vote for the 5.5 percent stability fee was executed on Oct. 28 with over 44,000 MKR in support of the decision.
Single user votes to decrease stability fee on MakerDAO
Less than two weeks after it was reduced from 10.5 to 9.5, the stability fee on MakerDAO has dropped once again.
However, the Oct. 28 drop wasn’t a result of a community consensus, but rather a governance takeover by a single user.
According to Daniel Onggunhao, a software engineer at Binance, the decision to introduce a 4 percent decrease in the stability fee on the network was made by a single user, who is said to hold around 7 percent of the total circulating supply of MKR.
The user put in 44,538 MKR in support of decreasing the stability fee from 9.5 to 5.5 per year.
Community has mixed reactions to MakerDAO’s easily centralized governance
The crypto community had mixed reactions to the news, with some shrugging it off saying a certain amount of centralization is always expected in proof-of-stake systems.
Others, including Binance CEO Changpeng Zhao, criticized MakerDAO’s “decentralization,” saying that concentrating governance in the hands of a few large whales goes against the foundations of crypto.
One of the most popular services in decentralized finance (DeFi), the collateralized debt positions (CDPs) offered by MakerDAO have now become significantly cheaper.
MakerDAO’s CDPs are a way for traders to leverage their exposure to Ethereum up to 150 percent. But, in order to withdraw the ether from their positions, users have to pay a stability fee, which acts as a counterweight to balance fluctuations in the supply and demand of Dai.
The stability fee also maintains Dai’s peg to the U.S. dollar, decreasing the volatility of the ecosystem.
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In this article
Maker is a decentralized autonomous organization on the Ethereum blockchain seeking to minimize the price volatility of its own stable token — the Dai — against the IMF’s international currency basket SDR.
Single Collateral DAI
$1.28634
Dai is a cryptocurrency that automatically reacts to emergent market conditions in order to stabilize its value against the major world currencies.
Ethereum
$3,401.17
Ethereum is a decentralized, open-source blockchain platform that enables the creation of smart contracts and decentralized applications (DApps).
Binance
Binance is a global cryptocurrency exchange that provides a platform for trading more than 100 cryptocurrencies.
Maker is a Decentralized Autonomous Organization that creates and insures the dai stablecoin on the Ethereum blockchain.
Changpeng Zhao, popularly known as “CZ,” is a notable figure in the cryptocurrency world, primarily for founding and leading Binance, the world’s leading cryptocurrency exchange by trading volume.