MakerDAO launches emergency proposal to limit USDC exposure

MakerDAO’s risk unit issued an emergency proposal to the governance community following the depegging of the USDC stablecoin following the collapse of Silicon Valley Bank.

Maker is a DeFi lending protocol that issues a decentralized stablecoin DAI. Creature 54.5% powered by USDC, DAI is also caught in the USDC depegging event and is currently trading at $0.93.

risk unit filed some urgent changes to limit Maker’s exposure to potentially compromised stablecoins and other risky collateral while maintaining enough liquidity to maintain the DAI peg and ensure Maker Protocol can process potential liquidation of crypto-collateralized vaults.

The proposals include reducing the maximum amount of DAI that can be borrowed with certain collateral, reducing the daily mint limit, increasing fees to prevent USDC dumping and eliminating exposure to other DeFi protocols.

creator of the DAO said it encourages “MKR holders and delegates to review and support this executive Choose with the aim of implementing the aforementioned parameter changes to the Builder Protocol as soon as possible.

“Once the executive vote is approved by MKR holders and delegates, the proposed changes will be applied to the Maker Protocol within the next 48 hours,” he added.

DAI/USD chart by CoinGecko

Earlier in the day, MakerDAO tweeted: “Total system underwriting stands at 154% with $8.26 billion under backing supporting 5.38 billion DAI. No liquidations have been triggered over the past week. The system works as expected and always has. The Code Maker Protocol is the law for DAI stability.”

USDC lost its peg against the US dollar overnight, dropping as low as it could $0.88 follow collapse from Silicon Valley Bank. The crypto market was frustrated with its issuer Circle for a lack of transparency regarding its exposure to the bank, which eventually became Circle confirmed as $3.3 billion of its roughly $40 billion USDC reserves.

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