The DeFi community is buzzing with the news that MakerDAO is trying to take its stablecoin DAI away from its dependence on stablecoin USDC. Yet despite what such a conversion could do to boost ETH’s price, Vitalik Buterin said it was a “terrible idea.”
On August 11, banteg shared information from MakerDAO’s Discord, stating that the protocol is planning to use USDC as a backing for stablecoin DAI to buy ETH.
According to a message in Discord, MakerDAO founder Rune Christensen said that he had looked closely at the recent US government ban on Tornado Cash, as well as the response of stablecoin issuer USDC, Circle freezes the protocol’s funds.
Rune worries that the same thing may repeat in the future, threatening the stability and decentralization of Maker in general and DAI in particular if it continues to depend on USDC.
Rune Christensen vowed to discuss it in more detail at the upcoming Maker meeting, stating that the community should prepare to have DAI depeg out of the USD when it is no longer backed by USDC.
DAI is the leading decentralized stablecoin on Ethereum, backed by multiple assets such as USDC, ETH, and WBTC. banteg said that with the current argument, MakerDAO is looking to completely remove influence from USDC, meaning that it is likely to use this 3.5 billion USDC to buy ETH, other ERC-20 assets, or even real-life property.
The banteg revelations caused a stir in the DeFi community, with Ethereum founder Vitalik Buterin quickly dismissing the scenario.
It is also implied that if the ETH rate is increased excessively, DAI will run the risk of becoming a second LUNA-UST, the pair of projects that collapsed in May due to a depeg.
It remains to be seen what Maker’s official decision on minimizing USDC exposure will be.
Also in the Discord chat, banteg shared a message indicating that MakerDAO is also having trouble with transferring DAI loans to a third party through the Genesis lending unit.
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