blockworks.co
Following the US Treasury’s sanctioning of crypto mixer Tornado Cash, MakerDAO co-founder Rune Christensen wants to uproot USDC from the massive crypto treasury that underpins its stablecoin DAI.
On MakerDAO’s official Discord channel, Christensen said the consequences of the Tornado Cash sanctions are “a lot more serious than I first thought.”
DAI’s dollar-value is inspired by what’s known as the Price Stability Peg (PSG). Minting DAI usually demands overcollateralization, but the PSG enables USDC holders to mint one DAI for every USDC deposited, opening a lucrative arbitrage opportunity when DAI rises above $1.
Even though DAI would very likely depeg from the US dollar if MakerDAO ditches USDC, the risk is “acceptable,” Christensen said.
And Rune might want to "yolo" the PSM $USDC into $ETH lmaooo pic.twitter.com/tVugbNlyaj
— Westie 🟪 (@WestieCapital) August 11, 2022
“The market may finally start to reward decentralization to the point where these risks are acceptable, because USDC is no longer the no-brainer it used to be,” Christensen said.
Luca Prosperi, another prominent MakerDAO figure, was very critical of the idea. “So let me understand, we have 80%-plus collateral concentration in our balance sheet, and we openly say that collateral is crap.”
But Christensen sees this move as essential given the potential for government crackdown.
“This is my thought process: there’s now a demonstrated way to instantly and unconstitutionally nuke any smart contract of all centralized stables at will, with no lead time to take preemptive actions. Countries tend to ban crypto when their economic conditions start tanking.”
This is a developing story.
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