DAI's circulating supply has experienced a remarkable surge, jumping 24% from 4.42 billion on March 9 to 5.48 billion on May 12. This rapid growth contrasts with the downward trend seen from October 2023 to March. DAI's supply is comprised of two components: the actual outstanding supply and the supply deposited into the Dai Savings Rate (DSR).

The DSR has been incredibly popular, with MakerDAO raising the savings rate to 1% in 2023, resulting in over 35 million DAI being deposited within a month. The rate was later increased to 3.3% and then 8% to remain competitive with current interest rates. This 8% hike in August 2023 led to a significant increase in DAI's supply.

However, the 8% interest rate was unsustainable, and the DSR was automatically reduced to 5.8% after over 20% of DAI was parked in the DSR. MakerDAO's founder proposed dropping the rate to 5% to allow the DSR to be higher for longer. Despite this, pressure from other yield opportunities like USDe, offering a 15.9% yield, has emerged.

In response, MakerDAO made changes to its fee mechanism and hiked the DSR to 15% to alleviate sell pressure. This change, effective March 9, appears to be driving the recent surge as users rush to tap into the high yield. As DAI's supply continues to grow, it's essential to understand the dynamics between the actual outstanding supply and the supply deposited into the DSR.