MakerDAO proposes to boost DAI demand & stability with parameter changes.

Is this the game plan to strengthen $DAI when $crvUSD launches?

Understand in simple terms.

Details below:

This proposal is to change some parameters of the Maker protocol, which affect the interest rates, fees, and risk profiles of different types of loans.

The proposed changes are:

-- Increasing the DSR from 2.5% to 3.33%, meaning users who deposit $DAI will earn more interest over time.

-- Increasing the Stability Fee for ETH-A, ETH-B, and WBTC-A vaults by 0.5% or 1%, depending on their risk profile, meaning if you use these assets for collateral, you will pay more interest over time.

-- Lowering the LR for some types of collateral by 5% or 10%, meaning borrowers will have a lower risk of liquidation.

-- Increasing the Debt Ceiling for $ETH-A, ETH-B, and WBTC-A vaults, meaning that more can be generated using these assets as collateral.

I believe the rationale for these changes is to make borrowing more attractive & to diversify the collateral portfolio of the protocol.

But there are some drawbacks from my POV:

1. Increasing the DSR and SF will make borrowing more expensive

2. Increasing the DC for some types of collateral will expose the protocol to more systemic risk if the market prices go volatile.

It's overall a great proposal, but let's see what the community thinks about it.

If you are wondering what any of the above terms are, I wrote a detailed case study on MakerDAO, AAVE & Compound on how these platforms work & what those terms mean.

You can read it here: https://mirror.xyz/0x34ddd9223D9DDb6B56F640824Af6FCC31e1deBF4/3GoZd2GNb4f1s8RogcALt59h9GSQqLsSDc6fM019pM0