How to participate in the investment opportunity of DAI stablecoin with an 8% annual interest rate?
In simple terms, there may only be this one opportunity at 8%.Original author: Cook Sun
This article will detail the sources of the 8% annualized return, as well as what DSR and EDSR are. Since MakerDAO does not have an official deposit page, we will also introduce four locations and steps to implement $DAI deposits.
First, let's clarify a concept: MakerDAO's DSR, which stands for Dai Savings Rate, can be simply understood as the deposit interest rate for the stablecoin $DAI. By depositing $DAI into the savings contract, users can automatically earn returns, similar to a regular savings account in the real world.
The proposed 8% interest rate is, strictly speaking, a new mechanism called EDSR, which stands for Enhanced Dai Savings Rate, an enhanced version of the current interest rate model.
First, let's discuss the source of the returns. We all know that an 8% yield exceeds that of U.S. Treasury bonds and other high-quality investment targets, so is it a real return?
Firstly, it is a temporary interest rate calculated in tiers. EDSR (Enhanced Dai Savings Rate) is a measure to temporarily increase user deposit incentives 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?
In simple terms, it is the ratio of the amount of $DAI deposited in DSR to the total amount. This means that as more $DAI is deposited in DSR, the interest rate will gradually decrease.
As shown in the figure below, when the utilization rate is <20%, the interest rate is 8%. When the utilization rate exceeds 50%, the interest rate will drop to 4.16%.
It is also important to note that EDSR is a one-time, unidirectional temporary mechanism, which means that EDSR can only decrease over time. Even if the DSR utilization rate declines, it cannot be increased again.
In simple terms, the 8% may only be available this one time.
After the above analysis, we have a basic understanding of the source of the 8% return. The principle assumes that if 100% of Maker DAO's stablecoin assets are used to buy RWA, then less than 20% of $DAI is earning returns, resulting in an overall yield that overflows. This portion constitutes the source of "8% > Treasury bond yield." (Specific real data needs precise calculation here) This is equivalent to reducing the DAO's own earnings and distributing them to $DAI depositors.
How to operate? - DeFiSaver (Smart Saving)
https://app.defisaver.com/smart-savings
In [Smart Saving], select Maker DSR;
Enter the amount to deposit in Supply;
The estimated returns per week/month/year will be displayed on the right.
How to operate? - DeFiSaver (Spark)
https://app.defisaver.com/spark
In the Supply window of Spark, switch the currency to $DAI;
After providing DAI, convert it to sDAI, which can be used for collateralized borrowing;
Spark is a lending protocol under MakerDAO, and sDAI is equivalent to aDAI in Aave, allowing users to earn DSR deposit interest while borrowing.
How to operate? - SummerFi
- On the Earn page, select Maker, and the subsequent operations are similar to DeFiSaver.
How to operate? - chai.money
$CHAI can be understood as a wrapped token that automatically helps you accumulate the principal and interest of $DAI in DSR.
