In response to a discussion board submit from Maker DAO, issuer of the U.S. dollar-pegged DAI stablecoin, on Mar. 11, the agency requested an “pressing govt proposal to mitigate dangers to the protocol.” Maker stated that it possessed a number of collaterals “uncovered to USDC tail threat” in mild of the extraordinary de-pegging of the USD Coin (USDC) stablecoin that started on Mar. 10. Maker DAO presently possesses greater than 3.1 billion USDC in collateral backing its DAI stablecoin.
Firstly, Maker proposes lowering the debt ceiling of UNIV2USDCETH-A, UNIV2DAIUSDC-A, GUNIV3DAIUSDC1-A, and GUNIV3DAIUSDC2-A liquidity supplier collaterals to 0 DAI. Subsequent, Maker needs to cut back each day minting limits of its USDC peg stability module from 950 million DAI to 250 million DAI and improve the payment from 0% to 1% to stop “extreme dumping of USDC.” One other stablecoin module, GUSD, will even see its each day minting restrict decreased from 50 million DAI to 10 million DAI if the proposal passes.
Maker additionally needs to remove publicity to decentralized finance protocols Curve and Aave of their entirety. In response to Maker, Curve “makes use of a set $1 worth for USDC,” which “presents a threat of dangerous debt accrual and doubtlessly financial institution runs with cascading market insolvency if the market worth of USDC falls considerably beneath the present collateral issue.” Whereas Aave would not possess such dangers, Maker nonetheless acknowledged that its “general risk-reward of depositing funds into the D3M should not favorable beneath present circumstances.”
Lastly, Maker proposes to extend the protocol’s debt ceiling to the USDP stablecoin issued by Paxos from 450 million DAI to 1 billion. The agency wrote:
“Paxos has comparatively stronger reserve belongings versus different accessible centralized stablecoins, consisting primarily of U.S. treasury payments, reverse repurchase agreements collateralized by U.S. treasury bonds. They face comparatively decrease potential for impairment versus different accessible stablecoins”
On Mar. 10, USDC depegged from the U.S. greenback after its issuer, Circle, disclosed it had $3.3 billion price of funds collateralizing the stablecoin caught on now-defunct Silicon Valley Financial institution. On the time of publication, USDC is presently buying and selling at $0.9025. In mild of the information, the DAI stablecoin has additionally degged to $0.9235.
