MakerDAO's 8% High Interest Strategy: Innovation or Risk?

Recently, MakerDAO adjusted the deposit interest rate for DAI in its lending protocol Spark Protocol to 8%, a rate that even surpasses the current yield on U.S. Treasury bonds. Such a high "risk-free" yield has raised questions in the market: is this a kind of Ponzi scheme?

The high yield of 8% primarily comes from the income generated by MakerDAO's significant introduction of Real-World Assets (RWA). Data shows that RWA assets now account for more than half of the MakerDAO protocol's balance sheet, with a large portion being U.S. Treasury bonds, which have an annual yield of about 5%. This income ultimately flows into MakerDAO, rather than into the pockets of DAI holders.

The purpose of MakerDAO's move is dual: on one hand, to stimulate the demand for DAI by increasing the yield, thereby expanding the collateral scale and purchasing more RWA assets, creating a virtuous cycle; on the other hand, this is also part of advancing its Endgame plan, which aims to achieve the complete decentralization of MakerDAO.

However, this high interest rate of 8% is not sustainable in the long term. MakerDAO has introduced a new mechanism called Enhanced Dai Savings Rate (EDSR), which is essentially a temporary "promotional event". As the usage rate of DSR increases, this excess interest rate will gradually decrease until it disappears. According to MakerDAO founder Rune, this benefit will completely vanish when the DSR usage rate reaches 50%.

It is worth noting that MakerDAO commits to never incurring losses as a result. In fact, this practice can be understood as MakerDAO allocating a portion of the protocol's revenue to DAI holders in order to attract more users.

Overall, MakerDAO has achieved considerable gains by acquiring a large number of RWA assets and has distributed some of the profits to DAI holders by raising interest rates, thereby increasing the demand for DAI and its user base. However, once the number of users participating in obtaining high interest reaches a certain scale, this interest rate will gradually return to normal levels. The long-term effects and potential risks of this strategy remain to be observed.