MakerDAO Adds USDC As Collateral After Huge Debt

MakerDAO adds the US dollar-backed stablecoin USD Coin (USDC) as the most considerable collateral to the protocol as we are reading in today’s USD coin news.

The Decentralized Finance project MakerDAO adds the USD Coin to its protocol as collateral via a blog post on the official website. The decision was brought up as a result of the Executive Vote in the MakerDao governance team, which made the USD coin the third approved collateral along with Ether and the Basic Attention Token, which is also on the platform. With USD Coin as collateral, the users can now use the stablecoin and open Maker Vaults to create the native Dai Token. According to the blog post, the stakeholders of the projects debated the merits of including a centralized stablecoin such as the USD coin would have on the Maker system. As we can read from the blog post:

 “By adding USDC swiftly, Dai price instability and the ongoing liquidity issues that have resulted from recent market volatility might be addressed. Importantly, the increase in Dai liquidity provided by USDC should benefit Keepers taking part in both FLIP and FLOP auctions.”

As a part of the decision, Maker explained that it has a flexible protocol that allows for the tokenized assets to be used merely as collateral as is with the USD coin since it measures up to the risk assurance parameters that are set forth by the Governance of the project. While the USD coin is now collateral on the Maker platform, the liquidation for the currency is disabled, and the price is pegged to $1. This decision comes at a tough time for the Defi ecosystem because of the recent crypto price crash. As reported by BTCManager, MakerDao auctioned MKR tokens to service the $4 million debt after the ETH spot price dropped by more than 60 percent at the start of the month.

Despite being the largest ETH-based Defi platform, Maker was on the verge of an emergency shutdown since it lost more than $5 million. The data analysis platform defipulse.com shows the total TVL for the ETH-based Defi market is now at $537 million. Earlier this year, the market reached $1 billion.