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30 September 2020

MakerDao's Short (and Long) Term Fixes for Dai's Broken Peg - CoinDesk

MakerDao's Short (and Long) Term Fixes for Dai's Broken Peg - CoinDesk


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In his conversation with CoinDesk, Christensen mentioned that a 1.01 CR would make the most sense as it could “put a price ceiling on dai.” Since DAI is trading at $1.04, every 101 USDC deposited into the vault would generate $103 worth of dai; this, in theory, should be enough to incentivize traders to arbitrage the difference and thus drive the peg down.

Sébastien Derivaux proposed the “creation [of] a USDC-M vault with no stability fees and a liquidation ratio of 100%” that “only whitelisted address from Maker can use.” In practice, approved users would buy USDC on the market with a dai flash loan, stake this USDC in the USDC-M vault to mint dai, pay back the flash loan, and repeat the process until there’s enough new dai in the market to drive the peg down.

Relying too much on USDC creates a central point of failure, and loading vaults with too much essentially amounts to “asset capture” if the competing stablecoin undergirds too much of dai’s collateral

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