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MakerDAO Governance Community Proposes Urgent Changes to USDC-Related Parameters

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On March 11, the MakerDAO governance community launched an urgent proposal to change the asset risk and governance parameters related to USDC and reduce the de…

MakerDAO Governance Community Proposes Urgent Changes to USDC-Related Parameters

On March 11, the MakerDAO governance community launched an urgent proposal to change the asset risk and governance parameters related to USDC and reduce the debt ceiling of USDC-related LPs such as UNIV2USDCETH-A, UNIV2DAIUSDC-A, GUNIV3DAIUSDC1-A and GUNIV3DAIUSDC2-A as collateral to zero.

MakerDAO launched an urgent proposal to change the parameters related to assets such as USDC to mitigate the risk of the agreement

Analysis based on this information:


On March 11, the MakerDAO governance community released an urgent proposal in response to growing concerns regarding USDC-related collateral. This proposal aims to change the asset risk and governance parameters for USDC and reduce the debt ceiling of several USDC-related LPs to zero. So, what does this all mean?

MakerDAO is a decentralized lending platform that enables users to obtain loans by using cryptocurrencies as collateral. In order to participate in the MakerDAO ecosystem, users must first supply collateral tokens – such as ETH, DAI, or USDC – in exchange for stablecoin loans known as DAI. In the case of USDC, MakerDAO has previously allowed its use as collateral for DAI loans. However, recent events have led to growing concerns over the risks associated with USDC.

USDC is a stablecoin that is pegged to the US dollar and backed by a reserve of US dollars held by the issuer, Circle. However, several issues have raised concerns regarding the stability and trustworthiness of USDC. Firstly, Circle has been accused of freezing user accounts and censoring transactions in the past, undermining the decentralized ethos of blockchain technology. Additionally, the reserve backing USDC has come under scrutiny, with Circle failing to provide transparency regarding its reserves.

Therefore, the MakerDAO governance community has proposed changes to mitigate these risks. Firstly, they aim to reduce the debt ceiling – or the maximum amount of DAI that can be minted using USDC as collateral – to zero for several USDC-related LPs. This means that USDC would no longer be accepted as collateral for DAI loans. Secondly, they aim to increase the liquidation ratio for USDC to further mitigate the risk of USDC volatility. Finally, they aim to have regular risk evaluations of USDC as an asset and take appropriate measures if necessary.

In conclusion, the proposed changes to USDC-related parameters reflect the MakerDAO governance community’s commitment to upholding the integrity and stability of the MakerDAO ecosystem. However, it remains to be seen how the community will respond and whether the proposals will be implemented.

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