Maker moves to meet demand for DAI

SparkLend has been approved for a doubling of its debt ceiling to 2.5 billion DAI

article-image

Phoenix Labs CEO and MakerDAO former protocol engineer Sam MacPherson | DAS 2022 New York by Blockworks

share

MakerDAO, creator of the DAI stablecoin, has a good problem: Demand for its product is high.

SparkLend, a borrowing and lending platform organized as a sub-DAO within Maker, has issued so much DAI in recent weeks that it needs authorization to lend more.

In a governance vote approved Thursday at 12:00 pm ET, Maker voted unanimously to double the D3M maximum debt ceiling to 2.5 billion DAI.

“D3M” stands for Decentralized Debt Markets Module, a mechanism designed to optimize the DAI liquidity across different DeFi platforms. The module automatically adjusts the DAI borrowing rates on external platforms (like Aave) to be in line with the Dai Stability Fee within the MakerDAO system.

Read more: MakerDAO balance sheet now majority crypto-backed loans

Motivating the change is the rapidly accelerating demand for loans at SparkLend in the past week, which left available DAI falling to 250 million. Maker’s risk experts lobbied in favor of the increase, arguing there’s no need to keep it so constrained.

“With recent bull market conditions, it is becoming increasingly difficult to keep up with borrowing demand,” Monet-Supply, analyst with Block Analitica wrote on the Maker forum, noting that the protocol blew through its last debt ceiling increase and is growing at an average rate of around 20 million DAI per day.

“This poses a risk of unintentionally hitting the D3M maximum debt ceiling and artificially limiting Spark’s growth,” he wrote. 

MakerDAO recently more than doubled stability fees across the board on March 10 following an executive vote. The Dai Savings Rate (DSR) jumped from 5% to 15%.

Stablecoin yield opportunities have been on the rise, leading traders to swap DAI borrowed at low rates for higher yielding USDC or other stablecoins used in DeFi.

For instance, in addition to promising high yields, a new entrant to the stablecoin market (Ethena’s USDe) is incentivized by a points-like system called “shards.”

Read more: Stablecoins need to focus on liquidity, not decentralization — Ethena Labs founder

That dynamic puts downward pressure on DAI’s dollar peg and pushed Maker’s PSM module, which allows swaps between DAI and USDC, down to record lows.

Read Blockworks Research: MakerDAO: Organic demand doesn’t grow on trees

Ethena co-founder, known as Leptokurtic, argued on an X space this week that his protocol’s contribution to Maker’s rate increase was overstated, noting that Ethena had captured less than 1% of the total value locked (TVL) in DeFi to date.

“I actually think the marginal impact that Ethena has had on these changes is probably less than people are giving credit for over the last few weeks,” Leptokurtic said. “These rate changes were going to happen with or without Ethena being there — it’s just now people make that connection a bit easier between rates in [centralized finance] and DeFi.”

Spark developer Sam MacPherson, CEO at Phoenix Labs, said during the same discussion that current rate levels are “almost certainly not sustainable” in the long run.

Read more: Spark Protocol is re-thinking stablecoin stability mechanisms

“Ethena is performing a great function here in bridging this disjointed rates behavior,” MacPherson said. “Maker is at the mercy of the market just as much as everybody else, it’s just that there’s no smart contract doing it, there’s more of a slower human process that people attribute agency to the rate setting within Maker — but that’s really not the case.”

For stablecoin holders right now, times are good, with many options to receive relatively safe double-digit yields.

The question is, how long can it last?

“You can’t have 30,40, 50% rates on USD that is sustainable,” MacPherson said. “Eventually [traditional finance] is going to come in on size,” and push rates back down.


Get the news in your inbox. Explore Blockworks newsletters:

Tags

Upcoming Events

Old Billingsgate

Mon - Wed, October 13 - 15, 2025

Blockworks’ Digital Asset Summit (DAS) will feature conversations between the builders, allocators, and legislators who will shape the trajectory of the digital asset ecosystem in the US and abroad.

Industry City | Brooklyn, NY

TUES - THURS, JUNE 24 - 26, 2025

Permissionless IV serves as the definitive gathering for crypto’s technical founders, developers, and builders to come together and create the future.If you’re ready to shape the future of crypto, Permissionless IV is where it happens.

Brooklyn, NY

SUN - MON, JUN. 22 - 23, 2025

Blockworks and Cracked Labs are teaming up for the third installment of the Permissionless Hackathon, happening June 22–23, 2025 in Brooklyn, NY. This is a 36-hour IRL builder sprint where developers, designers, and creatives ship real projects solving real problems across […]

recent research

Featured.png

Research

Helium stands at a pivotal moment in its evolution as a decentralized wireless network, balancing rapid growth, economic restructuring, and global expansion. With accelerated growth in domestic DAUs and Hotspots supporting its network, Helium is leveraging strategic partnerships and innovative proposals to scale internationally. The recent implementation of HIP 138, “Return to HNT,” has unified its token economy under HNT, simplifying participation and strengthening liquidity, while HIP 139’s phase-out of CBRS refocuses efforts on scalable Wi-Fi offload. Meanwhile, governance shifts under HIP 141 raise questions about centralization as Nova Labs consolidates control over the roadmap.

article-image

The asset surged over the past seven days to reach its highest-ever weekly close on the SOL/ETH pair

article-image

Industry watchers note that SOL ETFs have attracted a fraction of the demand for bitcoin and ether ETFs

article-image

Tariff swings impact stock market and company outlooks, with Apple and NVidia likely to be affected by China tariffs

article-image

The team says an attacker minted unclaimed tokens from ZKsync’s 2024 airdrop

article-image

The MIT research-based protocol is live in private testnet — laying the foundation for decentralized RAM

article-image

The Balkan micronation went from Bitcoin economy to blockchain buzzwords in 10 years