Analysis of the source of income for the 8% annualized interest rate of DAI stablecoin, and how to participate?

Odaily资深作者

2023-08-07 07:33

This article is about 795 words, reading the full article takes about 2 minutes

Simply put, there may only be this one opportunity for 8%.

Original author: @Cook 0x

This article will explain the source of the 8% annualized interest rate and what DSR and EDSR are. Since MakerDAO does not have an official deposit page, we will also introduce 4 locations and steps to deposit $DAI for everyone.

First, let's define a concept: MakerDAO's DSR, also known as Dai Savings Rate, can be understood as the interest rate for the stablecoin $DAI. By depositing $DAI into the savings contract, you can automatically earn interest, similar to a regular savings account in the real world.

The 8% rate mentioned here is strictly speaking a new mechanism called EDSR, which stands for Enhanced Dai Savings Rate. It is an enhanced version of the current interest rate model.

Let's talk about the source of the earnings first. We all know that an 8% return rate has already surpassed the returns of US Treasury bonds and other high-quality investment targets, so is it a real return?

First of all, it is a temporary rate calculated in a tiered manner. EDSR (Enhanced Dai Savings Rate) is a measure to temporarily increase the incentive for users to deposit when the utilization rate of DSR is low. EDSR is determined based on the utilization rate of DSR and gradually decreases as the utilization rate increases.

What is the utilization rate of DSR?

Simply put, it is the ratio of $DAI deposited into DSR to the total amount. In other words, as more $DAI is deposited into DSR, the interest rate will gradually decrease.

In the chart below, when the utilization rate is <20%, the interest rate is 8%. When the utilization rate is >50%, the interest rate will decrease to 4.16%.

It is also important to note that EDSR is a one-time, temporary mechanism that only decreases over time. This means that even if the DSR utilization rate decreases, it cannot increase again.

In summary, the 8% interest rate may only have this one opportunity.

After the above analysis, we have a basic understanding of the 8% source of income. The principle is that assuming MakerDAO has used 100% of its stablecoin assets to buy RWA, only less than 20% of $DAI is earning income. Therefore, the overall return rate exceeds the government bond yield, which constitutes the source of "8% > government bond yield". (The specific real data needs to be calculated accurately) This reduces the income of the DAO itself and distributes it to depositors of $DAI.

How to operate? - DeFiSaver (Smart Saving)

https://app.defisaver.com/smart-savings

- Select Maker DSR in [Smart Saving];

- Enter the amount to be deposited in the Supply field;

- The estimated earnings per week/month/year are displayed on the right.

How to operate? - DeFiSaver (Spark)

https://app.defisaver.com/spark

- Switch the currency in Spark's Supply window to $DAI;

- Convert the provided DAI into sDAI, which can be used for collateralized borrowing;

- Spark is a lending protocol under MakerDAO, and sDAI is equivalent to aDAI in Aave. This allows for borrowing while earning deposit interest rates from DSR.