MakerDAO (MKR) founder Rune Christensen has asked DAO members to consider converting its $3.5 billion USDC reserves to Ethereum (ETH) because of the extent of the Tornado Cash sanctions.
MakerDAO is considering a $3.5 billion ETH market buy, converting all USDC from the peg stability module into ETH.
— banteg (@bantg) August 11, 2022
Christensen made this suggestion via the DAO Discord group stating that additional research has shown him that the consequences of Tornado Cash sanction are more severe than initially thought.
rune: we should seriously consider depegging from usd pic.twitter.com/HBMrPH7LrW
— banteg (@bantg) August 11, 2022
“I think we should seriously consider preparing to depeg from USD. It is almost inevitable it will happen and it is only realistic to do with huge amounts of preparation.”
Meanwhile, Christensen later clarified that he intended a “partial Yolo” in which Maker buys ETH with some of its USDC collateral. He believes it is an option worth considering following the Tornado Cash embargo.
Yes, I think slowly DCA’ing some collateral into ETH is an option that can be considered depending on the severity of the blacklisting risk, which I personally think is much higher after the TC blacklist… it would exchange blacklist risk for depeg and haircut risk
— Rune (@RuneKek) August 11, 2022
Circle blacklist function fears
With about 40% of DAI reserve held in USDC, the protocol fears a situation where it could be affected by Circle’s sanctions.
In light of the recent blacklistings of USDC addresses there is no surprise that they’re considering de-risking and decentralizing by dumping their USDC holdings
Their potential approach of YOLO buying $3.5B worth of ETH seems crazy though
— Lucky (@Lucky_2147) August 11, 2022
However, converting $3.5 billion worth of its reserves into Ethereum also presents a risk of DAI de-pegging from USD — given the volatile nature of ETH and other cryptocurrencies.
Circle had blocked the 44 wallets sanctioned…
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