According to recent reports, MakerDao governance has been prompted to respond following the de-pegging of the USDC stablecoin after the collapse of Silicon Valley Bank. Consequently, the MakerDAO risk unit issued an emergency proposal that calls for swift action to mitigate the effects of the USDC depreciation.
This development has sparked concerns among the MakerDAO community, who are now looking to their governance structure to guide how to respond to this event.
Maker is a Decentralized Finance lending mechanism that is responsible for the issuance of the decentralized stablecoin DAI. DAI, which is 54.5% backed by USDC, has been engrossed in the USDC de-pegging incident and is presently trading at $0.93.
Risk unit proposes urgent changes to MakerDAO
In response to the recent de-pegging of the USDC stablecoin after the collapse of Silicon Valley Bank, MakerDAO’s risk unit has issued an emergency proposal to its governance community.
The proposal recommends making several immediate changes to minimize Maker’s exposure to unstable stablecoins and other precarious collateral while preserving enough liquidity to uphold DAI’s peg. Additionally, the proposal aims to ensure that the Maker Protocol can handle possible liquidations of crypto-collateralized vaults.
In relation, MakerDAO’s decision is a critical step towards preserving the stability of its ecosystem and safeguarding its users against any potential losses. Furthermore, MakerDAO’s primary focus has always been on minimizing risk and maintaining the value of DAI, its stablecoin.
By implementing these changes, MakerDAO intends to uphold its mission of offering a secure and decentralized alternative to fiat currencies while minimizing risks for its users.
Proposed Changes Await Governance Community Approval
On the other hand, MakerDAO’s governance community is set to evaluate and vote on the proposal, which demonstrates the cooperative character of the platform’s ecosystem. Assuming approval by MKR holders and delegates, the proposed alterations are anticipated to be implemented in the next 48 hours.
By taking this step, the organization demonstrates its dedication to upholding the Maker Protocol’s stability and security, which are essential components of the decentralized finance (DeFi) landscape. As the DeFi sector undergoes rapid expansion, it is crucial for platforms like MakerDAO to remain alert and safeguard their systems’ integrity while prioritizing their users’ interests.
MakerDAO’s system remains stable and secure
MakerDAO recently tweeted promising news to investors in their popular DeFi protocol by revealing that the system has been collateralized. Currently, the Protocol is backed by $8.26 billion worth of collateral, securing 5.38 billion DAI and resulting in a total collateralization rate of 154%.
In addition, MakerDAO’s system has been operating without any liquidations over the past week, demonstrating its smooth functioning as designed. This development is reassuring for individuals who depend on MakerDAO for its stablecoin, DAI, which consistently relies on the Maker Protocol’s programming for support.
As the DeFi space continues to grow and evolve, it is promising to see MakerDAO maintaining its high stability and reliability standards. The Maker Protocol’s code is indeed the law for DAI stability, and the latest update is a testament to the Protocol’s robustness and continued success.
In the aftermath of Silicon Valley Bank’s failure, the value of USDC plummeted to $0.88, creating discontent among crypto investors towards Circle, the USDC issuer, for not being transparent about its association with the bank. Circle eventually disclosed that it held approximately $3.3 billion of its $40 billion USDC reserves, causing further scrutiny.
