DeFi giant MakerDAO’s community has voted in favor of retaining stablecoin USDC as its primary reserve.
According to the results of a governance poll on Thursday, 79% of voters opted to maintain USDC as Maker’s primary reserve asset, while 21% voted to diversify the stablecoin reserves.
The proposal in question was put forward by Maker’s risk core unit team “monet-supply” last week. Option 1 of the proposal called for distributing Maker’s Peg Stability Module (PSM) stablecoin reserves across several assets.
“This has the benefit of increased risk diversification, where a single stablecoin facing impairment would have a lesser impact on DAI’s peg and underlying solvency conditions,” stated monet-supply.
Currently, USDC makes up a major part of Maker’s PSM assets, with around $3.07 billion locked in the stablecoin. Although a dollar-pegged stablecoin appeared a safe choice for reserve allocation, USDC’s depegging event earlier this month extended to DAI, demonstrating the consequence of relying so heavily on one source of collateral.
Still, monet-supply noted that diversifying away from USDC does not come without a few drawbacks. Specifically, significant minting or redemptions over a short period of time could present challenges to issuers of Maker’s other PSM assets, GUSD and USDP.
The option would also require imposing a fee for USDC to DAI swaps, which could impact user experience.
Meanwhile, the risk of sticking to USDC as a primary reserve would put Maker at risk of using the debt ceiling breaker in the event of another depeg risk event. This would concentrate minting capacity in the USDC PSM and reduce available liquidity, potentially putting liquidations of collateralized vaults at risk if DAI spikes upwards.
Despite these threats, Maker’s community has signalled its support for USDC as the main reserve asset. These parameter changes as a result of this vote essentially reverses the “emergency” changes implemented earlier this month.