MakerDAO Mulls USDC Collateral Support to Overcome Liquidity Risks

MakerDAO Mulls USDC Collateral Support for Mounting Risks

The recent decline in the crypto market has negatively impacted MakerDAO, as its market cap plunged sharply from $889 million to $246 million.

Thus, MakerDAO developers have held a public meeting to consider the code on the collateral adaptor for USDC.

They discussed adding funding for the USDC, a stablecoin backed by US dollars, as a hedge against liquidity danger.

The potential USDC collateral support will make it easier to lock up USDC, mint DAI and sell DAI to USDC to regain DAI’s liquidity and drive its peg down to $1 USD.

Diluted DAI

MakerDAO representative disregarded the Dai dilution argument, saying:

“DAI is decentralized because there is no central authority that mints or custodies or approves people’s access to it. The individual does all of it for themselves, that’s why the community is driving the parameters of the systems (per the discussions in forum).”

“The community has been discussing the potential for all kinds of assets as acceptable collateral in the system for ages. Many of those assets are not decentralized, like tokenized securities, should they ever be accepted by MKR holders,” he added.

“To say that DAI is not decentralized because of some of the assets that might back it would be erroneous.”

The foundation has reported that it is making strategic arrangements for the USDC Circle as collateral, but no plan for restoring Dai’s peg has yet approved by the Maker’s Board of Directors.

Crypto platforms aim to fund Coronavirus research

Gitcoin, a crowdfunding platform based on Ethereum, is one of the crypto firms that seek to donate or raise funds for the sake of combating coronavirus.

The platform has pledged nearly $50,000 in grants for the initiatives of fighting the epidemic.

Since the crypto market crash, several systems underpinning the Gitcoin network still face difficulties, especially as Ethereum is already facing high transaction costs. In addition, MakerDAO, which is behind Dai stablecoin, is expected to hold the first ever debt sale soon.

At the time of writing, DAI has dropped 6.31 percent to $1.020.

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Rabea Maguid 551 Articles
Rabea Maguid is a journalist completely obsessed with crypto industry. He holds B.A. from Al-Azhar University, and has a background in journalism and economics. Rabea Maguid likes to think about the future in a positive way, and sees blockchain as a potential driver of deep societal change.