MakerDAO Votes to Keep Gemini USD in DAI Stablecoin’s Reserves

Decentralized finance giant MakerDAO’s community voted for keeping Gemini USD (GUSD) stablecoin as part of the protocol’s reserve system for its DAI stablecoin in a dramatic vote that flipped at the finish line.

In a poll that concluded Thursday, 50.85% of the votes favored keeping the GUSD debt ceiling at $500 million level in Maker’s Peg Stability Module (PSM), while 49.15% voted for decreasing to zero. The result means GUSD will remain as a reserve asset for Maker’s $5 billion DAI.

Up until the very end of the voting, votes favoring removing GUSD from the PSM led the tally.

“Recent MakerDAO governance discussions have raised concerns about GUSD’s heavy reliance on the PSM and Gemini holding GUSD reserves at Silvergate,” Riyad Carey, analyst of digital asset research firm Kaiko, wrote in a report earlier this month.

The outcome averted near disaster for Gemini’s stablecoin, as 85% of all GUSD in circulation has been held at MakerDAO’s PSM, according to MakerDAO’s DAI stablecoin treasury website.

GUSD is a dollar-pegged stablecoin issued by the troubled crypto exchange of the Winklevoss twins, Gemini. Its vae is ostensibly backed one-to-one by cash and U.S. Treasury bonds, and it’s regulated by the New York State Department of Financial Services (NYDFS).

The Winklevoss twins’ crypto exchange has already come under pressure after halting withdrawals from its yield-generating Earn program; Earn is also being sued by the Securities and Exchange Commission.