In another huge development for Maker Protocol and open finance, DAI has hit its 100 million ceiling, and the community is going in for an executive vote on November 8. The vote to raise the ceiling is expected to be approved unanimously as DAI becomes an integral part of the open finance stack, November 7, 2019.
Smashing Through the Roof
In July 2018, MakerDAO held an executive vote to raise the debt ceiling from 50 million to 100 million. A little less than a year and a half later, the ceiling has once again been smashed and MKR holders will convene to vote on whether the ceiling should be raised or not.
DAI is second to USDC in terms of DeFi adoption, but its adoption growth is miles ahead of any other stablecoin on the stack. DAI is the only truly permissionless stablecoin that exists with such massive reach and usage.
Maker utilizes executive votes to influence on-chain governance in a distributed manner. Nobody knows who holds how much, but there are known whales who take part in the process and have enough to influence the vote in a particular direction.
Recently, the stability fee was reduced from 9.5 percent to 5.5 percent, but it came down from a whopping 20 percent in August 2019.
Governance as a Core Function
The direction Maker takes hinges almost entirely upon MKR holders. Although Rune Christensen, founder of Maker, has some serious clout, it ultimately boils down to executive voting proposals.
MKR holders earn the stability fee that is paid from people opening CDPs. So it is in their best interest to push the system toward terms that increase demand for CDPs.
With the stability fee at 20 percent, demand was strongly muted and this resulted in the low income from MKR holders and DAI holding above its $1 peg. A fee reduction promised to induce arbitrage conditions that brought the peg closer to $1 and brought back demand for CDPs.
This has obviously played out as DAI has hit its ceiling just a week after the stability fee decreased by 4 percent.
Governance by token vote has been criticized by many experts, but so far, it has served Maker well.