Crypto glossary
Stability fee
A stability fee is the interest charged on debt in a CDP stablecoin system, raised or lowered by governance to push the stablecoin back toward its peg.
When users mint a crypto-backed stablecoin from a collateralized debt position, the protocol charges them interest on the outstanding debt. This charge is called the stability fee. It accrues continuously and must be paid, in the stablecoin or deducted from collateral, when the position is closed. MakerDAO, now Sky, made the term standard, and similar fees exist in Liquity v2, crvUSD and other CDP designs.
The fee is a monetary policy lever. If the stablecoin trades below one dollar because too much has been minted, raising the fee encourages borrowers to repay, shrinking supply and lifting the price. If it trades above the peg, lowering the fee makes minting cheaper. Fees also generate revenue for the protocol and its token holders.
Changing the fee works slowly and indirectly, so it rarely fixes a sharp depeg on its own; peg stability modules and redemptions do more of that work. High fees can push borrowers to competing protocols, and some newer designs let borrowers set their own rate or adjust it algorithmically.
Example
With DAI trading slightly below one dollar for weeks, governance raises the ETH vault stability fee from 5% to 8%, and borrowers repay enough debt to bring the price back to the peg.