MakerDAO management has approved the USD Coin (USDC) as the third type of security in the Maker protocol, according to an article published in the community on March 17.
The decision was made outside of the usual weekly schedule in an extraordinary executive vote. The aim was to increase Dai’s liquidity (DAI) after market instability last week.
USDC now alongside Ether and Basic Attention Token
The USDC now joins Ether (ETH) and Basic Attention Token (BAT) as an accepted guarantee. These can be used to open chests and generate dai.
Previously, there was detailed discussion in the manufacturing community about the benefits of including the USDC and the appropriate risk settings for the token. There has also been a public debate on the possible impact of the introduction of a centralized stablecoin as collateral.
In the end, the community decided that the rapid launch of the USDC could resolve the instability of the Dai rate and the liquidity problems that have arisen since the fall of the ether market last Thursday.
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The Maker protocol allows users to generate Dai by locking guarantees in a smart contract or a safe. The unprecedented drop in Ether prices last week dropped the value of collateral below the value of the Dai generated in many vaults. This in turn led to liquidations.
Although the Maker protocol has mechanisms for such events, the scale of the sale was so huge that it did not work as expected. In at least one case, the liquidated guarantee was auctioned for 0 dai.
After exhausting all the dai in the buffer, the debt finally reached around $ 4 million.
This led to the first MakerDAO debt auction, which will take place on March 19 at around 10:28 a.m. EST. The debt auction mechanism is also defined in the Maker protocol. However, it was used for the first time.
As reported by Cointelegraph, the manufacturer’s management proposed on March 16 to add the USDC as a type of security. A stablecoin is not intrinsically affected by market instability. The manufacturer’s management has also introduced a mechanism to freeze the liquidation of securities. This serves as a potential circuit breaker if such a situation recurs.
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