MakerDAO Proposes Changes To DeFi Protocol In Response To Lending Events

The Open Market Committee of the MakerDAO governance team has issued a proposal to make changes to the parameters of the decentralized finance protocol in response to recent events in the DeFi lending space. They are seeking approval from the community to implement these changes.

The proposal cites a decrease in liquidity for smaller assets and market manipulation by Avi Eisenberg as reasons for the reduced acceptance of long-tail assets as collateral in the crypto lending industry. This was reportedly caused by the siphoning of $114 million out of DEX Mango Markets.

Long-tail assets are cryptocurrencies that have been around for a while but don’t see much trading activity. Instead of getting rid of these assets, DeFi protocols create pools using them to generate liquidity for this category of assets.

The new proposal includes plans to reactivate the Aave-DAI Direct Deposit Module (Aave D3M) with a limited debt ceiling and increase the Compound v2 D3M debt ceiling.

The proposal also includes plans to normalize stability fees for the WSTETH-B vault type and raise fees on the USDP PSM in order to prevent an increase in exposure.

The Open Market Committee believes that if these changes are implemented, they will result in an annual increase in revenue of approximately 525,000 DAI and an increase in COMP rewards for the Maker treasury from the Compound D3M.

Lido Finance Overtakes MakerDAO As Top DeFi Protocol

Lido Finance, a popular ETH staking platform, briefly surpassed MakerDAO as the DeFi protocol, with the highest total value locked (TVL) at the beginning of the year. This caused a significant increase in the value of Lido’s governance token, LDO, over the past week.

As of now, according to DeFiLlama, Maker has regained its position as the top DeFi protocol with a TVL of $6.27 billion. MakerDAO’s TVL has grown by 4% so far this year.

Related Reading | DCG Under Investigation By US Authorities For Financial Operations

The price growth can be attributed to a steady increase in MKR accumulation since the beginning of the year. An analysis of daily MKR price movements showed that the altcoin’s Relative Strength Index (RSI) and Money Flow Index (MFI) have been on an uptrend since January 3.

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