#DAI #USDC #Stablecoins #MakerDAO
In a recent announcement, the MakerDAO community has decided to maintain the USD Coin (USDC) as the primary reserve asset for the stablecoin, DAI. This decision was made after a period of instability in the market, during which DAI and USDC temporarily lost their parity with the US dollar.
More than half of the DAI in circulation were issued through USDC deposits in MakerDAO. While the community had considered replacing USDC with the stablecoin from Paxos, they ultimately decided to stick with USDC.
DAI is a stablecoin that seeks to maintain a price linked to the US dollar through a collateralization system. Unlike other stablecoins, such as USDC or Tether, DAI is based on a lending platform and a set of smart contracts on the Ethereum network to ensure its stability and decentralization.
Users can lock different types of crypto assets as collateral in Vaults to generate DAI. The users depositing these collaterals are required to maintain a minimum collateralization ratio to ensure that the amount of DAI in circulation is always backed by a greater value of assets.
When users want to retrieve their collateral, they must return the amount of DAI they generated, along with a stability fee. This stability fee acts as an incentive to maintain the balance between the supply and demand of DAI and ensure that its value remains close to the US dollar.
In addition to collateral in crypto assets, DAI has been incorporating real-world assets, such as liabilities from traditional financial institutions, to back its value. This allows DAI to have a broader and more diversified collateral base, which seeks to increase its resilience to market fluctuations and risks associated with specific crypto assets.
With USDC as the primary collateral for DAI, the MakerDAO community hopes to maintain stability and provide a secure and reliable stablecoin option for users.
