MakerDAO’s DAI was dragged down as USDC fell below the dollar peg. In order to protect the integrity of its stablecoin, the governance of the project adopted emergency measures this afternoon.
MakerDAO adopts emergency measures to strengthen the DAI
DAI, MakerDAO’s decentralized stablecoin bears the brunt of Circle’s loss of USDC dollar peg. Like other stablecoins, it endorses the status of collateral victim of the fall of Silicon Valley Bank (SVB).
Currently at $0.95, the DAI is therefore bearing the brunt of its high collateralization, often criticized, in USDC. It is with the aim of reducing this that emergency measures have been proposed on the MakeDAO governance forum by a member of the Risk Core Unit.
This proposal was voted on this afternoon, and thanks to the favorable outcome of the vote, it will be implemented Monday, March 13 at 5:14 p.m. Paris time :
Maker Governance has enacted a set of parameter changes through the latest emergency vote to reinforce the DAI peg.
Submitted parameter changes are scheduled for deployment in 48 hours, on March 13th at 16:14 UTC. https://t.co/JDHXrDDsih
—Maker (@MakerDAO) March 11, 2023
👉 To go further – Learn more about MakerDAO and its stablecoin DAI
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Important elements of this governance decision
The main metric concerns the daily limit of DAI that can be generated using USDC from the Peg Stability Module (PSM). While this was set at 950 million DAI, it will now be capped at 250 million. On the other hand, exchange fees from USDC to DAI were applied at 1%.
By “significant exposure to uninsured bank deposits“, the GUSD of Gemini also sees its daily cap lowered: it goes from 50 to 10 million DAI.
Conversely, MakerDAO governance recognized the strength of Paxos reserves, and more specifically its USDP stablecoin. This is why the debt ceiling collateralized via the latter increases from 450 million to one billion DAI. The daily issue limit in the PSM increases from 50 to 250 million DAI and concerning the exchange fees, they are removed in the USDP to DAI direction and increased to 1% in the opposite direction.
Several Uniswap liquidity tokens (LP-Token) involving trading pairs containing USDC were also measured. Upon entry into force of these proposals, it will no longer be possible to raise debt from the following LP-Tokenson the grounds that they present too great a risk andare not essential to maintaining adequate DAI liquidity» :
- UNIV2USDCETH-A;
- UNIV2DAIUSDC-A;
- GUNIV3DAIUSDC1-A;
- GUNIV3DAIUSDC2-A.
These are the main points of the measure that has been adopted, and the entirety of this proposal has been detailed in the Twitter thread presented upstream.
While waiting for the current situation to return to normal, it is interesting to note the speed demonstrated by this decentralized autonomous organization (DAO), to preserve the sustainability of this stablecoin with a capitalization of more than 5 billion dollars. The future will now make it possible to judge the effectiveness of these measures when they are implemented.
👉 Also in the news – Which players in the cryptocurrency ecosystem are affected by the fall of Silicon Valley Bank?
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Source: MakerDAO Governance
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I timidly discovered the world of blockchain at the end of 2018 during my quest for financial freedom. Initially invested moderately, it was only two years later that I took the gamble of betting everything on the movement that was taking shape then. I then dedicate 2021 to training myself better to acquire more knowledge and seriousness. As I often like to say: I still have a billion things to learn. And what I do know, I want to share with you.
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