MakerDAO Co-Founder Recommends DAI-USD Depegging

Christensen, the co-founder of MakerDAO, argued that “we must choose the path of decentralization” while admitting the protocol’s inability to comply with authorities.

MakerDAO Co-Founder Recommends DAI-USD Depegging 3

In light of recent speculations about decoupling its native token from USD Coin (USDC) amid Tornado Cash sanctioning, MakerDAO co-founder Rune Christensen reached out to the community to clarify why free-floating DAI may be the only option for the decentralized autonomous organization (DAO).

In his blog post, Christensen disclosed miscalculating the risks related to risk-weighted assets (RWA). He stated:

“Physical crackdown against crypto can occur with no advance notice and with no possibility of recovery even for legitimate, innocent users. This violates two core assumption that we used to understand RWA risk, making the authoritarian threat a lot more serious.”

The MakerDAO co-founder suggested that “we must choose the path of decentralization, as was always the intent and the purpose of Dai.”

It is vital to note that, according to daistats statistics, over 50% of DAI is currently collateralized by USDC.

DAI collateralization data. Source: Dai Stats

Rune Christensen believes that decentralizing Maker would reduce the impact of crackdowns on the overall protocol, adding:

“The only choice is then to limit attack surface by reducing RWA exposure to a maximum fixed percentage of the total collateral – this requires free floating away from USD.”

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Harold

CoinCu News

Harold

With a passion for untangling the complexities of the financial world, I've spent over four years in financial journalism, covering everything from traditional equities to the cutting edge of venture capital. "The financial markets are a fascinating puzzle," I often say, "and I love helping people make sense of them." That's what drives me to bring clear and insightful financial journalism to the readers of Coincu.