Information that Maker wants to use USDC to back DAI to buy ETH

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2022-08-11 20:08:40

The DeFi community is buzzing with the news that Maker is trying to take its stablecoin DAI away from its dependence on stablecoin USDC.

Information that Maker wants to use USDC to back DAI to buy ETH

On the evening of August 11, a well-known figure in the DeFi industry, a banteg, shared information from Maker’s Discord, saying that the protocol is planning to use USDC to back stablecoin DAI to buy ETH.

Specifically, according to a message in Discord, Maker’s founder, Rune Christensen, said he had looked closely at the recent US government ban on Tornado Cash, as well as the reaction of USDC stablecoin issuer Circle to freeze. money of this DeFi mixer protocol. Mr. Rune worries that the same thing may repeat in the future, threatening the stability and decentralization of Maker in general and DAI in particular if it continues to depend on USDC.

Although it only stopped at a message on Discord, Rune Christensen announced that he would discuss it more closely in the upcoming Maker meeting, asserting that the community should prepare mentally for DAI to depeg from the USD when there is no guarantee. in USDC.

Maker Rune Christensen’s message about DAI reducing dependence on USDC

DAI is the leading decentralized stablecoin on Ethereum, backed by multiple assets such as USDC, ETH and WBTC. At the time of writing, the circulating supply of DAI is 7.6 billion DAI, backed by $11 billion in collateral to ensure there is no risk of collateral loss. Of that, USDC accounted for 32.7% of the collateral — or about $3.5 billion.

Banteg said that with the current argument, Maker is looking to completely remove influence from USDC, meaning that it is likely to use this 3.5 billion USDC to buy ETH, other ERC-20 assets, or even even real life property.

The parameters of circulating supply and collateral assets of DAI on the evening of August 11, 2022. Source: Daistats

The banteg series of revelations caused quite a stir in the DeFi community, drawing comments from even Ethereum founder Vitalik Buterin, who was quick to dismiss the scenario above.

“Um, this seems like a very risky and bad idea. If the price of ETH drops suddenly, the value of the collateral will decrease but the leveraged positions will not be liquidated, leaving the whole system partially securitized.”

Many other arguments also suggest that if the ETH rate is increased too much, DAI will risk becoming a second LUNA-UST, the pair of projects that collapsed in May because of the depeg.

Still, it remains to be seen what Maker’s official decision on minimizing USDC exposure will be.

Also in the Discord chat, banteg shared a message indicating that Maker is also having trouble with transferring DAI loans to a third party through Genesis lending.

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