According to Daistats statistics, USDC, Circle’s stablecoin, backs 32% of DAI. Approximately $3.5 billion is the sum total here. DAI’s largest collateralized asset is this very thing.
Christensen, though, would like some of the $10.8 billion in crypto held by the DeFi lender to be “upvoted.” He enjoys making the exchange to Ethereum. The creators of MakerDAO are reportedly worried about the spread of malware after this week’s approval of the cryptocurrency mixing service Tornado Cash.
Christensen admitted, “I’m conducting more investigation into the repercussions of the Tornado Cache clearance and regrettably, it’s a lot more serious than I expected.”
“Yoloing is obviously suicidal, but the risk/reward of a temporary relocation could be worthwhile. These risks may become tolerable in the future, as USDC is now without Hasn’t been brainwashed,” he remarked, if markets begin encouraging decentralisation.
As a result of the announcement, the MKR token for MakerDAO dropped by 4%, to $1,068. Property values have dropped by more than 50% annually.
On August 8th, the US Department of the Treasury approved Tornado Cash, a privacy tool that has been accused of laundering over $7 billion worth of cryptocurrencies since 2019. Because of these measures, no one in the United States may use Tornado Cash.
The consortium behind USDC, the centre, banned 38 wallet addresses after the prohibition and froze their combined USDC holdings of $75,000. Since USDC’s introduction in September 2018, Circle and Coinbase’s consortium has blocked a total of 81 wallet addresses. The decentralisation of the DAI stablecoin by MakerDAO was brought to mind when the Tornado Cash wallet was banned.
Some have voiced fear that DAI’s reliance on USDC, a centralised asset vulnerable to government and corporate cynicism, will bring about the collapse of the entire system.
Eric Voorhees, creator of the cryptocurrency exchange ShapeShift, tweeted, “Dear MakerDAO community, you should immediately start cashing out your USDC collateral, converting it to a more censorship resistant stable.”
In order to maintain DAI tied to the dollar, token holders are required to pledge assets from a variety of cryptocurrencies participating in the MakerDAO network.
DAI, unlike Tether’s USDT and Circle’s USDC, has no centralised body directing its issue, leading to claims that it provides unprecedented decentralisation.
The Peg Stability Module (PSM) is what allows users to trade stablecoins like USDC for DAI on a one-to-one basis, thanks to DAI’s dollar-peg.
The stability peg mechanism has been compromised due to the addition of a third collateral backing DAI using USDC. However, if dollar parity isn’t constantly maintained through arbitrage, the DAI will eventually soar over $1 and fall back down to earth.