Maker Governance Community Voted For USDC As A New Collateral Asset In The Maker Protocol

  • The USDC is another stablecoin backed by the US Dollar which helps effectively stimulate the supply of Dai.
  • Due to the instability in Dai prices and continuous liquidity issues have resulted from current market unpredictability might be notified.

On 16 March, a discussion burst among Maker’s stakeholders about accepting USDC as a new collateral asset in the Maker Protocol. The USDC is another stablecoin backed by the US Dollar which helps effectively stimulate the supply of Dai.

The USDC approval

Before the poll, the community members of Maker discussed the benefits of USDC as well as the risk factors of the token in the Maker Governance Forum.

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Also, in a public meeting, the governance community considered about the introduction of a stablecoin as a collateral type to the protocol might impact on the users and the movement of Decentralized Finance (DeFi) as a whole.

There was a debate situation amongst the governance community during the time of voting. Finally, they raised a yes for adding USDC quickly. Due to the instability in Dai prices and continuous liquidity issues have resulted from current market unpredictability might be notified.

Mainly, a rise in Dai liquidity offered by USDC will benefit the investors taking part in both FLIP and FLOP auctions.

The risk parameters of USDC

The risk parameters of USDC includes Stability fee: 20% per annum, Collateralization ratio: 125%, Collateral auction lot size:: 50,000 USDC, Debt ceiling: 20 million, Collateral auction minimum price change:: 3%, Collateral auction bid challenge window: 6 hours, Collateral auction maximum duration:: 3 days, Dust: 20 (Dai), and Liquidation penalty: 13%.

The suppleness of the Maker Protocol is in such a manner that any kind of assets which can be tokenized could be added as collateral in the system. As long as it has been approved by the Maker Governance and has appropriate risk parameters.

Endorsing USDC would lead users to make Dai from automated Maker Vault lending positions that will help to lessen the current Dai supply crisis.  Moreover, USDC is not decentralized as Dai, but it would help the Maker project right itself in the near future.

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Priyanka Kulkarni
Priyanka Kulkarni, post-graduated in Business Administration holds worthy experience in market research and investment banking. She is passionate to flaunt her perception towards cryptocurrencies.

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