• MakerDAO [MKR] community voted to keep USDC as the primary reserve.
• The USDC scare caused holders to liquidate their holdings, causing it to lose its peg.
• USDC appears to have recovered from its initial downtime with a market valuation of nearly $34 billion and Maker (DAI) came in fourth with a market worth more than $5 billion.
MakerDAO Community Reinstates Trust in USDC
The MakerDAO community recently held a vote on how the DAI token would be backed in a peg-stability-module proposal (PSM). In the end, 79.02% of the community voted to keep USDC as DAI’s primary reserve, showing that they still trust in Circle’s [USDC].
The USDC Scare
Following the bankruptcy of Silvergate bank, which had significant exposure to many crypto projects including Circle, FUD developed toward USDC. As a result, holders scrambled to liquidate their holdings, causing it to lose its peg. This also impacted DAI due to its high exposure; it lost its peg as well and had 3 billion USDC locked in PSM – over 55% of PSM according to daistats.
Emergency Switch Proposal
In response, the MakerDAO community considered adopting an emergency switch that would halt PSM swaps on its system and stop token purchases necessary for creating fresh DAI tokens.
Current State of USDC & DAI
The exchange reserve for USDC has returned back normal according CoinMarketCap – with a market valuation of nearly $34 billion, it remained the second-largest stablecoin while Maker (DAI) came fourth with a market worth more than $5 billion.
Maker Predictions 2023-24
While there is no guarantee that this trend will continue over time, at present it appears that USDC will remain the primary backing for MakerDAOs [MKR]. If future FUD were ever encountered by Circle again however, then we could see another downturn for both DAI and MKR tokens.