DIP045 - Integrating MakerDAO’s Dai Savings Rate (DSR) into dForce Lending

Proposal

This DIP proposes integrating MakerDAO’s Dai Savings Rate (DSR) into dForce Lending to enable higher rates for DAI depositors.

Background

The previous DIP043 was unable to meet the implementation threshold and this DIP will serve as an additional request to seek the dForce community’s opinion on the DSR integration.

The Dai Savings Rate (aka DSR) is an interest rate that allows DAI holders to receive a share of the revenue earned by MakerDAO. In May 2023, MakerDAO proposed to increase the DSR to 3.49%.

The DSR is funded from the stability fees that users pay for borrowing DAI against collateralized assets. MakerDAO offers CDPs in a wide range of assets, from BTC, USDC to tokenized assets like US treasury bonds.

MakerDAO invested in the bonds as a way to increase exposure to low-risk, liquid traditional assets. Following $500 million bond purchase in Oct 2022, MakerDAO announced another purchase of $700 million in treasury bonds, growing bond holdings to $1.2 billion.

Motivation

By integrating MakerDAO’s DSR into dForce Lending, it allows DAI holder to earn lending rate on top of the DSR to further improve their DeFi yields.

Specification

From the protocol level, when a user supplies DAI into dForce Lending, he will receive iDAI as deposit certificate that includes both DAI’s lending rate and the DSR.

Under the hood, dForce will stake DAI into MakerDAO to unlock DSR for depositors. When a user withdraws DAI from dForce Lending, the protocol will execute the redemption of DAI from MakerDAO to facilitate the request.