MakerDAO’s risk unit issued an emergency proposal to its governance community following the depegging of the USDC stablecoin after the collapse of Silicon Valley Bank.
Maker is the DeFi lending protocol that issues the decentralized stablecoin DAI. Being 54.5% backed by USDC, DAI has also been caught up in USDC’s depegging event and is currently trading at $0.93.
The risk unit proposed several urgent changes to limit Maker’s exposure to potentially impaired stablecoins and other risky collateral while maintaining sufficient liquidity to sustain DAI’s peg and ensure the Maker Protocol can process potential liquidations of crypto-collateralized vaults.
The proposals include reducing the maximum amount of DAI that can be borrowed against specific collateral, reducing daily mint limits, increasing fees to discourage dumping of USDC and eliminating exposure to other DeFi protocols.
MakerDAO said it encouraged “MKR holders and delegates to review and support this executive vote with the purpose of deploying the aforementioned parameter changes to the Maker Protocol as soon as possible.
“Once the executive vote is approved by MKR holders and delegates, the proposed changes will be deployed to the Maker Protocol within the next 48 hours,“ it added.
Earlier in the day, MakerDAO tweeted: “Total collateralization of the system is at 154% with $8.26 billion worth of collateral backing 5.38 billion DAI. No liquidations have been triggered during the last week. The system is working as expected and always has been. Maker Protocol's code is law for DAI stability.”
USDC lost its peg to the U.S. dollar overnight, dropping as low as $0.88 following the collapse of Silicon Valley Bank. The crypto market was frustrated with its issuer, Circle, over a lack of transparency regarding its exposure to the bank, which Circle eventually confirmed as being $3.3 billion of its approximately $40 billion USDC reserves.
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