MakerDAO Now Offering Savings Yields Higher Than Wall Street
The decision to hike savings rates will likely make DAI a more attractive asset for risk-averse investors
Lordn/Shutterstock.com
Decentralized financial services giant MakerDAO is hiking the savings yield for its stablecoin DAI from 0.01% to 1% after the latest governance vote.
All DAI holders are able to deposit their stabletokens into a Dai Savings Rate contract for a 1% annual yield — equivalent to an APY percentage.
An increased savings rate will enable DAI to be more competitive than retail TradFi offerings.
Sam MacPherson, a protocol engineer at MakerDAO, tweeted, “In my view Maker should take strong action to halt the capital outflows from DeFi.”
The overall value of all assets locked across DeFi protocols is down 75% this year, shrinking from $166.7 billion to $42.41 billion, with MakerDAO making up about 16% of that total.
“This is ultimately good for the DeFi ecosystem as we will be able to keep the economic energy within DeFi,” he added.
MakerDAO’s DAI savings interest rate is now higher than a handful of traditional US banks including Wells Fargo, which has a standard interest rate of 0.15% for its Way2Save savings accounts and 0.25% for money market accounts.
TD Bank’s Simple Savings rate sits at 0.02%, while Chase Savings’ annual interest rate sits at 0.01%.
MakerDAO’s new DAI rate is still lower than 1-Year US Treasury yields, which currently sit at 4.64%. CapitalOne also offers 3% APY on certain savings accounts.
In any case, appetite for crypto borrowing has not been high since the downfall of centralized finance lenders such as Celsius and BlockFi, leading to low DeFi yields across the board.
“The DSR is the base rate of DeFi — it sets the lower bound for yields. Due to Maker’s size, increasing the DSR is akin to a rising tide that lifts all boats,” MacPherson told Blockworks.
“Aave, Compound and other money markets will be able to incorporate this yield into their protocols and pay users more for lending their Dai. This will slow down / halt capital searching for better returns at a bank and leaving the DeFi ecosystem,” he said.
MakerDAO’s latest decision to hike savings rates will likely make DAI a more attractive asset for risk-averse investors — especially those keen to look outside Wall Street for their savings interest.
Get the news in your inbox. Explore Blockworks newsletters:
- Blockworks Daily: The newsletter that helps thousands of investors understand crypto and the markets, by Byron Gilliam.
- Empire: Start your morning with the top news and analysis to inform your day in crypto.
- Forward Guidance: Reporting and analysis on the growing intersection of crypto and macroeconomics, policy and finance.
- 0xResearch: Alpha directly in your inbox. Market highlights, data, degen trade ideas, governance updates, token performance and more.
- Lightspeed: Built for Solana investors, developers and community members. The latest from one of crypto’s hottest networks.
- The Drop: For crypto collectors and traders, covering apps, games, memes and more.
- Supply Shock: Tracking Bitcoin’s rise from internet plaything worth less than a penny to global phenomenon disrupting money as we know it.
