Home Crypto News MakerDAO founder to promote $3.5 billion in USDC for ETH backing

MakerDAO founder to promote $3.5 billion in USDC for ETH backing

by Cryptoroz


  • The MakerDAO neighborhood has objected to a Terra-like transfer of backing a big majority of DAI with Ether (ETH).
  • Ethereum co-founder Vitalik Buterin referred to as it a really dangerous concept after which MakerDAO founder issued a clarification.

In a  latest growth, MakerDAO founder Rune Christensen urged all of the DAO members ought to severely get thinking about a depeg of the DAI stablecoin from the U.S. Greenback.

The latest growth comes following the U.S. Treasury sanctioning crypto mixer Twister Money final week over allegations of facilitating cash laundering. Commenting on MakerDAO’s Discord channel on Thursday, August 11, founder Rune famous that the sanctions are “sadly extra critical than I first thought”.

Submit the ban on Tordano Money, USDC stablecoin issuer Circle began freezing the sanctioned USD Coin (USDC) addresses. The crypto agency has blocked 44 such USDC addresses which are on the listing of Specifically Designated Nationals. Reportedly, Circle has frozen greater than $75,000 in stablecoins quickly after the order of the U.S. Workplace of Overseas Asset Management (OFAC).

The attention-grabbing half is that greater than 50 p.c of MakerDAO’s DAI has been collateralized by USDC. Thus, founder Rune has expressed issues over the heavy dependence of MakerDAO on a single stablecoin managed by a centralized entity. Talking on this complete matter, Rune wrote:

I’ve been doing extra analysis into the implications of the Twister Money sanction and, sadly, it’s much more critical than I first thought

I feel we must always severely contemplate making ready to depeg from USD. It’s nearly inevitable it’s going to occur and it is just lifelike to do with enormous quantities of preparation.

Transferring $3.5B in USDC to Ether (ETH)

Issues turned much more attention-grabbing when MakerDAO founder Rune Christensen proposed changing its USDC stablecoins to Ether (ETH). Later, Yearn.finance core developer banteg famous that MakerDAO was contemplating transferring all of its USDC to Ethereum (ETH). This entails shifting $3.5 billion price of USDC to ETH. If applied, it will imply that greater than 50 p.c of the DAI shall be backed by ETH.

The MakerDAO neighborhood reacted sharply after the information. The neighborhood stated that this proposed concept from Rune would result in one other Terra within the making. Earlier than the Terra collapse, Terra had backed an enormous variety of its USDT stablecoins with Bitcoin. Nonetheless, in the course of the USDT depeg, Terra needed to promote all of its Bitcoin reserves and nonetheless failed to manage the depeg.

Curiously, Ethereum co-founder Vitalik Buterin additionally participated on this latest dialogue noting:

Errr this looks like a dangerous and horrible concept. If ETH drops quite a bit, worth of collateral would go manner down however CDPs wouldn’t get liquidated, so the entire system would danger turning into a fractional reserve.

Later, the MakerDAO founder clarified that not all stablecoin collateral would transfer into ETH. “I feel slowly DCA’ing some collateral into ETH is an possibility that may be thought of relying on the severity of the blacklisting danger, which I personally assume is far increased after the TC blacklist… it will alternate blacklist danger for depeg and haircut danger,” he stated.



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