MakerDAO (decentralized autonomous organization) founder Rune Christensen has called for the community members to consider depegging Maker (MKR)’s stablecoin DAI from USD, and perhaps (slowly) getting into ethereum (ETH) – which Vitalik Buterin argued would be a “terrible idea.”
Writing in the DAO’s Discord channel, as yearn.finance (YFI) core developer banteg shared, Christensen wrote to the members that,
“I think we should seriously consider preparing to depeg from USD… it is almost inevitable that it will happen and it is only realistic to do with huge amounts of preparation.”
The founder shared his reasoning behind this opinion, specifically referring to the US Treasury sanctioning the popular mixer Tornado Cash.
As reported, this week, the Treasury’s Office of Foreign Assets Control (OFAC) effectively banned the Ethereum-powered crypto mixing service in the US. While the community appeared to agree that bad actors seek to use services like Tornado Cash to launder funds, many argued that privacy-providing apps are important, and most agreed that the OFAC’s move would likely turn out to be a watershed moment in regulation.
Notably, the ban’s effects were felt promptly. Circle, the issuer of the USD coin (USDC) stablecoin, began feezing tokens, starting with some USD 75,000 worth of the stablecoin, which are connected to Tornado.
This is relevant as, per Dai Stats, nearly 50% of DAI is collateralized by USDC.
Christensen wrote that,
“I have been doing more research into the consequences of the [Tornado Cash] sanction and unfortunately it is a lot more serious than I first thought.”
Non-USD linked collateral
— Rune (@RuneKek) August 9, 2022
Developer banteg shared another post on Thursday, per which MakerDAO is actually considering converting its USDC from the peg stability module into ETH.
MakerDAO is considering a $3.5 billion ETH market buy, converting all USDC from the peg stability module into ETH.
— banteg (@bantg) August 11, 2022
However, Ethereum co-founder Vitalik Buterin described this as a “terrible idea”, stating that it’s risky, and should the price of ETH drop substantially, the “value of collateral would go way down,” with more issues and subsequent consequences likely to follow.
And Tron (TRX) founder Justin Sun agreed.
I have to agree 👀 https://t.co/YrlIgWHR8U
— H.E. Justin Sun🌞🇬🇩 (@justinsuntron) August 12, 2022
Importantly, Christensen noted that,
“What I actually wrote in the maker governance discord was that yoloing all the stablecoin collateral into ETH would be a bad idea.”
He did add, however, that moving some collateral into ETH slowly is an option “that can be considered.”
What I actually wrote in the maker governance discord was that yoloing all the stablecoin collateral into ETH would be a bad idea kek
— Rune (@RuneKek) August 11, 2022
MKR is trading at USD 1,090 at 9:50 UTC, down 2% in a day and up over 3% in a week. Per CoinGecko, DAI is the 4th stablecoin by market capitalization with USD 6.95bn.