2 years ago
MakerDAO (MKR) laminitis Rune Christensen has asked DAO members to see converting its $3.5 cardinal USDC reserves to Ethereum (ETH) due to the fact that of the grade of the Tornado Cash sanctions.
MakerDAO is considering a $3.5 cardinal ETH marketplace buy, converting each USDC from the peg stableness module into ETH.
— banteg (@bantg) August 11, 2022
Christensen made this proposition via the DAO Discord radical stating that further probe has shown him that the consequences of Tornado Cash authorisation are much terrible than initially thought.
rune: we should earnestly see depegging from usd pic.twitter.com/HBMrPH7LrW
— banteg (@bantg) August 11, 2022
“I deliberation we should earnestly see preparing to depeg from USD. It is astir inevitable it volition hap and it is lone realistic to bash with immense amounts of preparation.”
Meanwhile, Christensen aboriginal clarified that helium intended a “partial Yolo” successful which Maker buys ETH with immoderate of its USDC collateral. He believes it is an enactment worthy considering pursuing the Tornado Cash embargo.
Yes, I deliberation dilatory DCA’ing immoderate collateral into ETH is an enactment that tin beryllium considered depending connected the severity of the blacklisting risk, which I personally deliberation is overmuch higher aft the TC blacklist… it would speech blacklist hazard for depeg and haircut risk
— Rune (@RuneKek) August 11, 2022
Circle blacklist relation fears
With astir 40% of DAI reserve held successful USDC, the protocol fears a concern wherever it could beryllium affected by Circle’s sanctions.
In airy of the caller blacklistings of USDC addresses determination is nary astonishment that they're considering de-risking and decentralizing by dumping their USDC holdings
Their imaginable attack of YOLO buying $3.5B worthy of ETH seems brainsick though
— Lucky (@Lucky_2147) August 11, 2022
However, converting $3.5 cardinal worthy of its reserves into Ethereum besides presents a hazard of DAI de-pegging from USD — fixed the volatile quality of ETH and different cryptocurrencies.
Circle had blocked the 44 wallets sanctioned by the US Office of Foreign Assets Control.
The stablecoin issuer conceded that its enactment was against the ethos of an unfastened internet. However, it had to marque a determination to comply with existing laws.
Crypto assemblage compares the thought to Terra
Crypto assemblage members are already comparing MakerDAO’s thought to Terra ecosystem Bitcoin (BTC) purchase.
if true, this is Do Kwon level
you don't denote a bargain similar this and past bash it each astatine once
— DCinvestor.eth ⌐◨-◨ (@iamDCinvestor) August 11, 2022
Remember Terra / ust and btc collateral 
— JamieD’s BitcoinFraud (@ElPako81465943) August 11, 2022
— Dylan LeClair 
(@DylanLeClair_) August 11, 2022
Why does this instantly punctual of erstwhile and wherever (price enactment wise) of LFG's BTC purchase?
— Tasal (@0xTasal) August 11, 2022
Buterin rejects the $3.5B ETH acquisition idea
Ethereum co-founder Vitalik Buterin does not deliberation Maker’s thought is good. According to Buterin, it “seems similar a risky and unspeakable idea” due to the fact that it places the full strategy astatine risk, particularly if the worth of ETH drops.
Errr this seems similar a risky and unspeakable idea. If ETH drops a lot, worth of collateral would spell mode down but CDPs would not get liquidated, truthful the full strategy would hazard becoming a fractional reserve.
— vitalik.eth (@VitalikButerin) August 11, 2022
Instead, Vitalik suggested a diversification of stables arsenic collateral. According to him, non-ETH collateral should not transcend 20% of the full oregon perchance bounds the collateral to a maximum of 20% successful each jurisdiction.
Personally I deliberation nary azygous benignant of non-ETH collateral should beryllium allowed to transcend 20% of the total. Maybe adjacent bounds to max 20% successful immoderate azygous jurisdiction.
And if you can't bash that, enactment a bounds connected DAI's maturation (eg. by adding a antagonistic involvement rate) until you can.
— vitalik.eth (@VitalikButerin) August 11, 2022
Buterin continued that the reserve diversification could beryllium “19% USDC, 19% immoderate euro thing, 19% thing retired of Singapore?”
19% usdc, 19% immoderate euro thing, 19% thing retired of Singapore?
— vitalik.eth (@VitalikButerin) August 11, 2022
The station MakerDAO laminitis proposes converting $3.5B USDC reserve to Ethereum appeared archetypal connected CryptoSlate.
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