Makerdao Issues Emergency Proposal to Address $3.1B USDC Collateral Crisis

– Makerdao issued an emergency proposal to address $3.1 billion in USDC collateral after a stablecoin depegging incident.
– The proposal aims to limit the project’s exposure to potentially impaired stablecoins and provide liquidity for potential liquidations of crypto-collateralized vaults.
– This is not the first time Makerdao has faced issues with DAI’s collateral backing, as a similar incident occurred on “Black Thursday” three years ago.

Makerdao Issues Proposal After USDC Depegging Incident

On March 11, 2023, the decentralized finance project Makerdao issued an emergency proposal following the USDC depegging incident that saw the stablecoin dip down to $0.877 per unit. At the time of writing, Makerdao commands $3.1 billion in USDC collateral that backs a portion of the project’s stablecoin, DAI.

Proposal Aims to Limit Exposure to Potentially Impaired Stablecoins

Members of Makerdao have been discussing a recent emergency proposal that aims to address the $3.1 billion in USDC assets the project holds as collateral. The news comes as Circle Financial revealed it had funds stuck at Silicon Valley Bank (SVB) and its associated stablecoin, USDC, broke its $1 parity rate. Presently, USDC is trading for $0.91 per coin and five other affected stablecoins have seen their prices drop accordingly – including Makerdao’s DAI which has slipped to as low as $0.881 per coin over 24 hours.

Proposal Intended To Limit Risk & Ensure Market Liquidity

Makerdaos proposed changes are intended to limit its exposure to potentially impaired stablecoins while maintaining enough liquidity for DAI not trading significantly above $1 if conditions change again suddenly and ensuring there is adequate market liquidity for processing potential liquidations of crypto-collateralized vaults should they occurr in future scenarios..

Not First Time Makerdao Has Suffered Collateral Losses

This isn’t the first time Makerdao has had issues with DAI’s collateral backing – precisely three years ago during “Black Thursday”, Ethereum’s crashing price greatly strained the system resulting in approximately $4 million worth of DAI being left underwater due to auction failure .

Voters Encouraged To Support Proposals Quickly

Makerdao is encouraging all voters to review and support any proposals related implementing these changes “as soon as possible”.