MakerDAO, the decentralized autonomous organization behind the issuance of the DAI stablecoin, has announced emergency governance measures to limit volatility amidst growing concerns over the stability of stablecoins. The proposal comes after Circle, the issuer of USDC, disclosed that $3.3 billion of its $40 billion reserves remained stuck due to the shuttering of Silicon Valley Bank, leading users to switch to competing assets.
The emergency proposal aims to decrease the total supply of DAI available for minting with other centralized stablecoins to prevent situations where the protocol’s stablecoin is adversely impacted by market turbulence. MakerDAO delegates are currently voting on the proposal, which, if passed, will enable the DAO’s governance to set the debt ceiling for any collateral type to zero.
The MakerDAO community is considering these emergency measures to protect DAI from slipping beneath the dollar mark, as nationwide concerns grow about the stability of stablecoins. The proposed changes are aimed at reducing the amount of DAI that can be minted with other centralized stablecoins following concerns over Circle’s exposure to the shuttered Silicon Valley Bank, which pushed users away from USDC and into competing assets.
The MakerDAO community has been closely monitoring the stability of stablecoins and their potential impact on the broader cryptocurrency market. The proposal to limit DAI minting with centralized stablecoins is just one of several measures being considered to safeguard the stability of the protocol and protect the value of the DAI stablecoin.
Overall, the MakerDAO emergency governance measures aim to limit DAI volatility and prevent potential disruptions caused by market turbulence. The proposal is an important step towards maintaining the stability and trustworthiness of the DAI stablecoin, and ensuring that it remains a reliable and widely used asset in the decentralized finance (DeFi) ecosystem.