MakerDao Reassures Its Customers After Gemini’s Trouble

After the Gemini Earn service was affected by the news that Genesis Trading was suspending the withdrawal feature, MakerDAO spoke to reassure its users and explained the questions surrounding GUSD.

Genesis Global Trading, the lending arm of the crypto investment bank, suspended new buybacks and loans due to the collapse of FTX on November 16. Shortly after the news broke, brokerage Gemini announced that there would be a delay in the withdrawal of their Earn product, of which Genesis is a lending partner.

As was updated in an earlier Coincu News article, this chain stoppage comes from when Genesis announced the company had over $175 million frozen on FTX.

The corollary was when significant inflows began to withdraw from the Gemini exchange. There were $850 million withdrawn in the last 24 hours, causing the exchange’s stablecoin reserves to drop to the threshold of $150 million.

As a result, as one of the largest lending protocols in the field of decentralized finance, MakerDAO makes users worry that they will also be affected.

The protocol, whose main business model is to take collateral from users and assign credit through its algorithmic stablecoin DAI, can be problematic.

The person explaining the reason is Alex Svanevik, CEO of Nansen.io, an Onchain research company. Svanevik revealed that a large amount of GUSD tokens (73% of the supply) are allocated in the Maker protocol. The GUSD token is the stablecoin of the Gemini exchange affected by Genesis.

However, he revealed that Maker recently became the holder of this huge amount of GUSD, indicating the Gemini brokerage firm’s credit claim.

Faced with users’ worries, MakerDao jointly explained that GUSD’s reserve fund is completely separate from Gemini Earn’s operating funds. Furthermore, MakerDAO and stablecoin DAI are not invested in or related to any Gemini Earn activities.

It can be seen that the collapse of FTX is beginning to exert its destructive power, capturing a large market share that has affected a series of companies. Users are worried about the domino effect that may appear in the near future.

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