Home Cryptocurrencies Altcoins MakerDAO’s Proposal to Tackle Stablecoin Risks and its Impact on MKR

MakerDAO’s Proposal to Tackle Stablecoin Risks and its Impact on MKR

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MakerDAO, one of the leading decentralized finance (DeFi) platforms, has proposed a new solution to the problem of unstable cryptocurrencies, particularly stablecoins. The proposal aims to minimize the risks associated with stablecoins while increasing the resilience of the DAI peg. The recent depegging of USDC has rekindled worries over stablecoins in poor market circumstances, prompting MakerDAO to insulate itself from this vulnerability.

The proposal has gained significant traction, with MKR gaining over 3% in the last 24 hours as of Mar. 12, according to trackers. In this article, we will delve into how MakerDAO aims to achieve its objectives and the impact of this proposal on MKR.

Raising Costs to Minimize Exposure To achieve its objectives, MakerDAO plans to raise the costs associated with USDC-DAI swaps. The logic behind this is that increasing swap costs will reduce the number of USDC-DAI swaps while providing an incentive for using alternative methods of selling USDC. This move aims to minimize exposure to the liquidity concerns associated with stablecoin runs.

Additionally, if the proposal is approved, a maximum of 250m DAI may be minted daily. This move will increase the resilience of the DAI peg while minimizing exposure to unstable stablecoins. The plan has several incentives, including an increased debt limit of 1b DAI.

MKR’s Surge in the Market Despite the gloominess of March so far, MKR traders should take note that the token has maintained a good portion. As of Mar. 12, according to CoinMarketCap, the asset increased from its previous 24-hour price by 3.2% to $678.21. The altcoin has recorded a 24% decrease despite the increase but recorded a 3% increase in its market cap within the same period. At the time of writing, the asset had a circulating supply of 977,631 MKR.

MKR chart 03/12/23 – Source: coinmarketcap.com

Conclusion MakerDAO’s proposal to minimize the risks associated with stablecoins and increase the resilience of the DAI peg is a significant step in the DeFi space. If approved, the proposal has the potential to mitigate the risks associated with stablecoins while enhancing the value of MKR. The surge in the market shows that MKR traders are optimistic about the proposal, and it will be interesting to see how it pans out in the coming days.

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