MakerDAO is considering USDC as collateral support to improve liquidity and the tech team has already started preparing the technical transition regardless an executive vote.
MakerDAO, leading player in the decentralized finance sector, is facing liquidity risk in an uncertain market. The MakerDAO community is considering adding support for USDC, the cryptocurrency associated with Circle, as an alternative collateral to help bear this risk, according to a community thread on March 16.
MakerDAO’s Foundation Dev Team had a call on the matter at 11 AM ET today, discussing the code for the USDC collateral adaptor — a recording of that call is available here.
According to the post describing potential USDC collateral support, the move would allow for locking up USDC, minting DAI and selling the DAI for USDC to restore DAI’s liquidity and push its peg back toward $1 USD. It would also let vault holders close their Vaults without eating the loss on the DAI peg being high against USD.
The writeup also outlines a couple perceived negatives. According to the author, USDC support would reduce DAI’s decentralized “purity” (it would no longer be backed 100% by decentralized assets) and add to its regulatory risk in the United States, among other considerations.
A MakerDAO representative offered a counterpoint on USDC support diluting the company’s decentralization:
DAI is decentralized because there is no central authority that mints or custodies or approves people’s access to it. The individual does all of it for themselves, that’s why the community is driving the parameters of the systems (per the discussions in forum).
The community has been discussing the potential for all kinds of assets as acceptable collateral in the system for ages. Many of those assets are not decentralized, like tokenized securities, should they ever be accepted by MKR holders.
To say that DAI is not decentralized because of some of the assets that might back it would be erroneous.
This content is provided by public RSS feed at https://cointelegraph.com/feed. Please contact us if you have any questions.