The MakerDAO co-founder wants to replace the USDC reserve that underpins the stablecoin DAI by ether (ETH). A proposal that is not to everyone’s taste, starting with Vitalik Buterin, the founder of Ethereum.
MakerDAO’s DAI: More exposure to USDC?
Rune Christensen, the co-founder of MakerDAO, wants to remove the $3.5 billion in USDC reserves that serve as collateral for the stablecoin DAI. Furthermore, he suggests that these funds be converted into ETH.
The reason is that he is worried about the turn of events since the US Treasury sanctioned the crypto mixer Tornado Cash. Indeed, following this, Circle, the firm that issues USDC tokens, was forced to freeze the addresses of the targeted instances. Since then, Christensen, upset by this censorship, plans to eliminate all exposure to this stablecoin, which represents 50% of its reserve. But more broadly, the objective is to remove any dependence on stablecoins centralized.
That said, it is possible that the DAI will no longer be pegged to the US dollar. Indeed, for Christensen, the detachment of the dollar is inevitable and must be anticipated. A discussion on this issue will take place today with members of the MakerDAO community.
Ethereum founder disagrees
Christensen’s proposal is far from unanimous. Although this could be beneficial for ETH, Vitalik Buterin notably believes that it is a “risky and appalling idea”. He points out that the sharp drop in the price of ETH could destabilize the DAI because it would significantly reduce the value of its collateral.
To limit reliance on USDC, Vitalik proposed to diversify the reserve across various assets. And this, so that none exceeds 20% of the total amount. To the extent that this is not possible, it might be useful to limit the growth of the DAI. For example, by applying a “negative interest rate” until it is.
The stablecoins are a major issue within the crypto ecosystem. The inherent risks, such as pressure from government authorities, are a real threat to this asset class.
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