In a big development, Rune Chirstensen, founder of MakerDAO has urged all the members to “seriously consider” preparing the depeg of the DAI stablecoin from the U.S. Dollar.
The comments came on the MakerDAO discord channel on Thursday, August 11, after the U.S. Treasury sanctioned crypto mixer Tornado Cash earlier this week. Post this, Circle – the issuer of USDC stablecoin – started freezing all the sanctioned USDC addresses.
As the OFAC banned residents from using Tornado Cash, while placing 44 USDC addresses under its sanctions list. As a result, Circle had to freeze $75,000 worth of stablecoins. On the MakerDAO Discord, Rune noted:
The sanctions are “unfortunately more serious than I first thought. I think we should seriously consider preparing to depeg from USD. It is almost inevitable it will happen and it is only realistic to do with huge amounts of preparation.”
Interestingly, Rune also proposed converting those USDC into ETH. Currently, more than 50% of MakerDAO’s DAI stablecoin is collateralized by USDC. Thus, Rune expressed concern over this heavy dependence on a single stablecoin and a centralized asset.
With a market cap of $7 billion, DAI is currently the fourth-largest stablecoin in the market pegged to the U.S. Dollar.
Moving USDC to ETH, Vitalik Buterin Calls It A Terrible Idea
Yearn.finance core developer @bantg tweeted that MakerDAO might consider moving all its $3.5 billion USDC to ETH. Thus, more than 50% of DAI stablecoins shall be backed by ETH, jumping from the existing 7%.
MakerDAO is considering a $3.5 billion ETH market buy, converting all USDC from the peg stability module into ETH.
— banteg (@bantg) August 11, 2022
Soon after Rune’s proposal, the MakerDAO community reacted calling it another Terra in the making. Terra committed a similar mistake of backing all its USDT tokens with Bitcoin. With USDT undergoing a massive depeg, Terra had to liquidate all its BTC reserves.
Even Ethereum co-founder Vitalik Buterin has called this a risky proposition. Warning about it, Buterin said:
Errr this seems like a risky and terrible idea. If ETH drops a lot, value of collateral would go way down but CDPs would not get liquidated, so the whole system would risk becoming a fractional reserve.
However, Rune clarified that they are not completely going to transfer USDC to ETH. However, he still sticks to the idea of considering partial transfers.
The post Is MakerDAO Moving All Its USDC Funds to ETH? Vitalik Buterin Calls It Terrible Idea appeared first on CoinGape.
- Mobile app
- Telegram Channel
- Telegram Group
- Binance Referral Link
- Bitmex Referral Link
- (Recommended For Leverage) ByBit Referral Link
- Buy Ledger Nano at discounted price
- Buy Cool Wallets at discounted price
Don't forget to share your review/suggestions for the android app.
All In One Crypto App is an execution-only service provider. The material provided on this website is for information purposes only and should not be understood as investment advice. Any opinion that may be provided on this page does not constitute a recommendation by All In One Crypto App or its agents. We do not make any representations or warranty on the accuracy or completeness of the information that is provided on this page. If you rely on the information on this page then you do so entirely on your own risks