• On March 11, 2023, Makerdao issued an emergency proposal to address the $3.1 billion in USDC collateral that backs its stablecoin DAI.
• Makerdao’s emergency proposal aims to limit the project’s exposure to potentially impaired stablecoins and other risky collateral while maintaining liquidity of DAI.
• The proposed changes are expected to be posted in the next ~12 hours or less and Makerdao is encouraging all voters to review and support them.
On March 11, 2023, the decentralized finance project Makerdao issued an emergency proposal following the USDC depegging incident that saw the stablecoin dip down to $0.877 per unit. At the time of writing, Makerdao commands $3.1 billion in USDC collateral that backs a portion of the project’s stablecoin, DAI.
Members of Makerdao have been discussing a recent emergency proposal that aims to address the $3.1 billion in USDC assets the project holds as collateral. The news comes as Circle Financial revealed it had funds stuck at Silicon Valley Bank (SVB) and its stablecoin, USDC, broke its $1 parity with five other affected stablecoins – including Makerdao’s DAI which slipped to a 24-hour low at $0.881 per coin.
The proposed changes are intended to limit Maker’s exposure to potentially impaired stablecoins and other risky collateral while maintaining enough liquidity of DAI so it does not trade significantly above $1 if conditions change and ensuring there is adequate market liquidity for potential liquidations of crypto-collateralized vaults.“
The collaterals „are exposed to potential USDC tail risk,“ according to Makerdao’s proposal which also notes that „proposal(s) implementing these changes are expected to be posted in the next ~12 hours or less.“ The team is encouraging all voters to review and support these proposals „as soon as possible.“
This isn’t the first time Makerdao has had issues with DAI’s collateral backing as precisely three years ago during March 12’s “Black Thursday” event saw Ethereum’s depleting price strain the stablecoin project resulting in roughly $4 million worth of DAI left underwater due too auction failure..
In response to this latest incident involving USDC depegging, MakerDao has issued an emergency proposal with aim of limiting their exposure from potentially impaired collaterals while preserving adequate market liquidity for any future liquidations or vaults associated with crypto-collateralized assets . It remains now for members of makerDAO community approve or reject these proposals when they are eventually released within 12 hours or less from now .