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MakerDAO Rejects ‘Diversification’ Plan, Votes to Keep USDC as Primary Collateral

27. March 2023 /

• MakerDAO has voted to keep USDC as its primary collateral for Dai (DAI) stablecoin.
• An alternative proposal to diversify collateral into Gemini Dollar (GUSD) and Paxos Dollar (USDP) was rejected by a 79% vote.
• The passed measure ends the 1% USDC-to-DAI minting fee, and increases the USDC-to-DAI minting capacity from 250 million to 450 million while reducing the fee to 0%.

MakerDAO Votes To Keep USDC As Primary Collateral

MakerDAO, the decentralized autonomous organization that governs the Dai (DAI) stablecoin, has voted overwhelmingly to keep USD Coin (USDC) as the primary collateral for Dai. An alternative proposal to “diversify” collateral into Gemini Dollar (GUSD) and Paxos Dollar (USDP) was rejected in a 20% to 79% vote, according to the proposal’s official page.

Risk of Cascading Bank Run Reduced

In the proposal posted on March 17, the MakerDAO Risk Core Unit suggested that the risk of a cascading bank run in the U.S. has been reduced, thanks to responses from the federal government. As a result, they argued that any remaining risk associated with using USDC as collateral had declined significantly since last week and further solvency concerns or depegs were not expected at this time.

Two Options Proposed

The Risk Core Unit offered two options in order to “normalize” rules for minting Dai now that the crisis had passed: spreading minting capacity limits across USDC, GUSD and USDP; or increasing USDC-to-DAI minting capacity from its current 250 million mark up to 450 million while reducing fees down to 0%.

Vote Results

MKR holders overwhelmingly approved option two with 79.02% voting for it versus 20.69% for option one. Less than 1% (0.29%) voted to reject both options, and 0.15 MKR in votes (around 0%) abstained from voting altogether.

Outcome Of Vote

The passed measure ends the 1% USDC-to-DAI minting fee that was previously implemented, increases its minting capacity from 250 million up 450 million and reduces fees down 0%.