MakerDAO Maintains Stability and Security Despite High Mortgage Rates
On March 11, the latest data released by MakerDAO on social media showed that the current mortgage rate of the Maker system was 154%, that is, 5.38 billion DAI…
On March 11, the latest data released by MakerDAO on social media showed that the current mortgage rate of the Maker system was 154%, that is, 5.38 billion DAIs were supported by collateral worth 8.26 billion dollars. MakerDAO did not trigger liquidation in the past week, and the system operated as expected. In addition, PSM is currently operating smoothly as expected, with a reserve of $3.15 billion and a 100% mortgage to support 3.15 billion DAI.
MakerDAO: the current mortgage rate is 154%, and the PSM reserve is $3.15 billion
Analysis based on this information:
The latest data released by MakerDAO on March 11 revealed that the Maker system’s mortgage rate hit a high of 154%. This means that collateral worth $8.26 billion was supporting 5.38 billion DAIs, the stablecoin issued by the MakerDAO platform. Despite the high mortgage rate, MakerDAO reported that the system operated as expected, and no liquidations were triggered in the past week.
The MakerDAO platform is a decentralized autonomous organization (DAO) that operates on the Ethereum blockchain. It allows users to borrow DAI against collateral of other cryptocurrencies, such as Ether (ETH), which are held in smart contracts on the platform. The mortgage rate is the ratio of the total value of the collateral to the amount of DAI in circulation, and it determines the level of risk in the system.
A high mortgage rate means that the collateral backing DAI is worth more than the amount of DAI in circulation, which is a positive sign for the health of the system. However, it also means that borrowers are paying more interest to borrow DAI, which could limit demand for the stablecoin.
Despite the high mortgage rate, MakerDAO has maintained stability and security, thanks to its liquidation mechanism. When the value of the collateral backing a loan drops below a certain level, the Maker system automatically sells the collateral to repay the lender, avoiding a default. This ensures that the system is always overcollateralized and that there is no risk of borrowers defaulting on their loans.
PSM, or the Peg Stability Module, is another mechanism used by MakerDAO to stabilize the DAI token’s value. It involves selling DAI from the system’s surplus to buy back outstanding DAI, effectively reducing the supply of DAI in circulation and maintaining its value relative to the US dollar. The fact that PSM is operating smoothly and has a reserve of $3.15 billion is a positive sign for the stability of the DAI token and the MakerDAO platform.
In conclusion, the latest data released by MakerDAO shows that the platform is operating smoothly and maintaining stability and security despite a high mortgage rate. The platform’s liquidation mechanism and Peg Stability Module are working as expected, ensuring that the system is overcollateralized and that the value of the DAI token remains stable. MakerDAO’s success in maintaining stability and security will help to build confidence in the platform and attract more users in the future.
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