• MakerDAO voted to keep USDC as primary collateral and rejected ‘diversification’ plan
• The passed measure ends the 1% USDC-to-DAI minting fee that was previously implemented
• 79.02% of MKR holders approved increasing the USDC-to-DAI minting capacity from its current 250 million to 450 million and reducing the fee to 0%
MakerDAO Votes To Keep USDC As Primary Collateral
The decentralized autonomous organization MakerDAO recently voted to keep USD Coin (USDC) as the primary collateral for Dai (DAI), a stablecoin. An alternative proposal to “diversify” collateral into Gemini Dollar (GUSD) and Paxos Dollar (USDP) was rejected in a 20% to 79% vote, according to the proposal’s official page.
Reduction Of Minting Fees
The Risk Core Unit suggested that due to responses from the federal government, the risk of using USDC as collateral has been reduced. As a result, they proposed two options: spreading minting capacity limits across USDC, GUSD and USDP; or increasing the USDC-to-DAI minting capacity from its current 250 million to 450 million and reducing the fee associated with it from 1% down to 0%.
Approval Of Second Option
MKR holders overwhelmingly approved this second option, with 79.02% voting for it versus 20.69% for the first option and less than 1%, or 0.29%, rejecting both options altogether. This approval means that Dai will continue have outsize exposure to USDC, while also reducing fees associated with converting USDT into DAI.
Reducing Risk Of Cascading Bank Run
The Risk Core Unit argued that some risks remain when using USDT as collateral, such as potential exposure to uninsured bank deposits and weaker legal structure compared with other assets like GUSD and PAXD. By opting against diversifying their assets, MakerDAO is attempting reduce these risks by limiting exposure only one asset class – USDT – while also reducing fees associated with converting USDT into DAI by dropping it down from 1% all way down 0%.
MakerDAO’s decision is sure be met positively by stakeholders who are looking for ways reduce risk associated with Dai without compromising on liquidity or increasing fees associated with conversion of fiat currency into DAI stablecoins.