Dai Savings Rate (DSR)
What is DSR?
Dai Savings Rate (DSR) is an addition to the Maker Protocol that allows any Dai holder to earn savings in Dai.
Dai does not automatically earn savings, rather you must activate the DSR by interacting with the DSR contract pot of the Maker Protocol. This means transferring Dai from your wallet to the Maker Protocol. It is important to note that the Dai can always be redeemed immediately (within a block), as there are no liquidity constraints, and can ONLY be retrieved to the depositing account.
Therefore it can be beneficial for any custodian of Dai to integrate functionality to activate the DSR on Dai in their custody. Similarly, any decentralized exchange, wallet or dapp in general can enable anyone to earn the DSR by integrating the functionality as well.
What is EDSR?
Enhanced Dai Savings Rate (EDSR) is a system to temporarily increase the effective DSR available to users in the early bootstrapping stage when DSR utilization is low. The EDSR is determined based on the DSR and the DSR utilization rate, and decreases over time as the utilization increases, until it eventually disappears when utilization gets high enough. EDSR is a one-time, one-way temporary mechanism, which means that the EDSR can only decrease over time, it cannot increase again even if DSR utilization goes down.
Other parameters and mechanisms that are dependent on the DSR, such as certain stability fees, are not affected by the EDSR, but only by the underlying DSR. This means it is possible that stability fees can be lower than the EDSR when it is in effect.
EDSR Upper Limit = 8%
| Tier | Utilization | Multiplier | Effective DSR |
|---|---|---|---|
1 | 0% - 20% | 3x | 8% |
2 | 20% - 35% | 1.75x | 5.81% |
3 | 35% - 50% | 1.3x | 4.32% |
4 | >50% | 1x | 3.19% |
What is sDAI?
Savings Dai (sDAI) is an ERC-4626 representation/wrapper of DAI in the Dai Savings Rate (DSR) module. sDAI allows users to deposit DAI to receive the yield generated by the Maker protocol while still being able to transfer, stake, lend and use it in any way you want.
“Swapping” between DAI and sDAI does not need to be done via a DEX but can be achieved by depositing and withdrawing from the DSR module.
You can interact with sDAI through the Spark Protocol frontend at Spark Protocol.
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