The DAI stablecoin issuer MakerDAO issues an emergency proposal to mitigate the risks involved in the $3.1 billion USDC assets Maker holds as collateral, following the depeg of Circle’s USDC stablecoin caused by the bank run of Silicon Valley Bank.
MakerDAO notes: “The proposed changes are intended to limit Maker’s exposure to potentially impaired stablecoins and other risky collaterals, while maintaining enough liquidity to prevent DAI from trading significantly above $1 if conditions change, and ensuring there is adequate market liquidity to process potential liquidations of crypto collateralized vaults.”
Also Read: USDC Faces De-peg after disclosing $3.3B Deposit in SVB
The firm proposes to effectively reduce daily mint limits to 250 million DAI, and increase the tin parameter to swap USDC into DAI from the current 0% to 1%.
For GUSD-PSM, MakerDAO is proposing to reduce the daily mint limit to 10 million DAI aiming to limit potential losses due to contagion risk.
Other than these motives, MakerDAO wants to set the target borrow rate to 0 to eliminate exposure to Compound and Aave protocols.
The firm also suggests raising from 450 million DAI to 1 billion the protocol’s debt cap for the Paxos Dollar (USDP) stablecoin issued by the Paxos Trust Corporation.
MakerDAO proposes lowering the debt ceiling for following liquidity provider collaterals to 0 Dai.
- GUNIV3DAIUSDC1-A,
- GUNIV3DAIUSDC2-A, UNIV2USDCETH-A,
- UNIV2DAIUSDC-A
The proposal also noted lowering the Governance Security Module (GSM) delay to 16 hours in an effort to increase the decision-making agility of the governance.
Today at 16:14 UTC, the deployed parameter modifications that have been submitted will take effect to reinforce the DAI peg.
Also Read: Circle Averts Danger of $3.3B USDC Reserve held in Silicon Valley Bank
