Maker DAO Whale Brings Down Interest to 5.5%

The most recent round of voting saw a significant centralization of influences, where a single large voter had enough MKR to sway the decision.

Maker DAO is not as decentralized as previously thought. A single large-scale entity either used his accumulated MKR coins, or collected coins from other holders, to vote down the interest rate.

The vote was to decide on an interest rate of either 13.5% or 5.5%. At the last moment, a “whale” moved in with enough voting power to choose the latter option.

https://twitter.com/onggunhao/status/1188824097918029825

MKR, with a price of $518.82, is a coin that is rather difficult to access. Thus, voters may be hampered from influencing the organization. In the past months, Maker saw its interest rates exceed 20%, and the current level of 5.5% is relatively low, signifying it may be easier to achieve DAI stability.

Currently, there are more than 88 million DAI issued, with slightly higher trading volumes above $29 million in 24 hours. DAI has dropped to around $0.99, a usual level of fluctuations, as most stablecoins sank a cent from their dollar peg during the recent BTC rally.

The new lowered interest rate may be an indicator for increased trust in DeFi. Higher interest rates are seen as a hedge against a bank run, and are usually happening during periods of higher trust. At this point, it is unknown if the lowered rate was voted by a wider audience, or deliberately lowered by a large-scale MKR owner.

The lowered rate arrives just days before a new vote, this time to choose the package of altcoins and tokens for the multi-collateral DAI.

The ETH held in custody has also grown, leaving DAI 360% collateralized. The ETH held as collateral grew from around 1.49 million to above 1.63 million.

Maker and Eth2Dai remain some of the most active smart contracts on the Ethereum network. With the recent price rally, interest in DeFi and confidence may have increased, as there is less risk of sharp price drops and potential liquidations of the collateral.

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