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MakerDAO Proposes Emergency Measures to Mitigate USDC Risk Exposure

MakerDAO introduces urgent measures to address risks from USDC depegging, impacting DAI stablecoin collateral and minting limits.
Published on 2023-03-11

MakerDAO's Urgent Proposal

MakerDAO, the issuer of the DAI stablecoin, has initiated an urgent executive proposal to address risks associated with the depegging of USD Coin (USDC). This move comes after the USDC stablecoin experienced significant volatility, prompting concerns over the stability of MakerDAO's operations, which have $3.1 billion in USDC collateral backing DAI.

Collateral and Minting Adjustments

In response to the risk exposure, MakerDAO suggests reducing the debt ceilings for several liquidity provider collaterals, including UNIV2USDCETH-A and UNIV2DAIUSDC-A, to zero. This measure aims to limit potential losses stemming from USDC's instability. Additionally, MakerDAO plans to lower the daily minting limits of its USDC peg stability module from 950 million DAI to 250 million DAI. The proposal also includes a fee increase from 0% to 1% to discourage excessive USDC conversion.

Impact on GUSD Module

The proposal extends to the GUSD stablecoin module, where MakerDAO intends to cut the daily minting limit from 50 million DAI to 10 million DAI. These adjustments reflect a broader strategy to safeguard the protocol during periods of market instability.

Ensuring Stability

These proposed changes highlight MakerDAO's proactive approach to maintaining the stability and security of its DAI stablecoin amidst external financial disruptions. By adjusting collateral and minting parameters, MakerDAO aims to mitigate potential risks and ensure the robustness of its system in the face of market volatility.

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