MakerDAO moves $250M from Coinbase to rebuild DAI collateral
The collateral backing the DAI stablecoin’s peg dipped below intended levels — and it took multiple days to deploy backup funds
A raft of liquidations forced MakerDAO to spend half of the $500 million it holds in a Coinbase Custody account to protect the peg for its DAI stablecoin.
DAI’s USDC reserves — which needed to be above at least $200 million to be considered safe — nearly sank below $60 million Tuesday morning before the manager of Maker’s Coinbase trust transferred $250 million into DAI’s so-called peg stability module (PSM).
The liquidity fire drill highlighted the permissioned process by which the largest decentralized stablecoin refills its reserves.
The PSM is a collateral pool that lets users mint USDC for DAI 1:1 and arbitrage DAI back to its dollar peg. If the PSM’s reserves empty out, DAI’s price could drift above or below a dollar.
“The likeliest outcome is nothing notable happens. The worst outcome would be a depegging of DAI for a few minutes to a few hours. But you’d observe the USDC flows on the relevant Coinbase addresses. The USDC would arrive any minute,” PaperImperium, the governance liaison at GFX Labs, said in a direct message.
Read more: MakerDAO sticks with USDC reserve despite calls for diversification
A Maker community member noticed on Saturday that the PSM’s funds had dropped below $300 million, which should trigger a transfer from Maker’s $500 million Coinbase Custody account. Allan Pedersen, CEO of the DeFi lending firm Monetalis, then commented multiple times on the forum asking the trust management firm SHRM to fund the PSM.
Monetalis was also obligated to email and call SHRM about the forum post, according to a Maker document outlining the process.
Over $100 million left the PSM between Sunday and Tuesday before the Coinbase Custody transfer arrived . A source familiar with the matter told Blockworks that the larger transfers out of the PSM seemed to be going towards centralized exchanges.
On Maker’s forum, Pederson wrote that teams are working to automate the PSM using smart contracts, “but, for now, the instruction-based automation using trustees, administrators, legal structures and banks/central exchanges is safe and stable.”
Don’t miss the next big story – join our free daily newsletter .
Follow Sam Bankman-Fried’s trial with the latest news from the courtroom .
- Coinbase
- DAI
- liquidity
- Maker
- stablecoins
Disclaimer: The content of this article solely reflects the author's opinion and does not represent the platform in any capacity. This article is not intended to serve as a reference for making investment decisions.
You may also like
How OpenAI cemented its place on a rocky road in 2024
Share link:In this post: OpenAI had a challenging journey in marking itself as a prominent force in Artificial Intelligence. However, major milestones and other setbacks occurred for the company in 2024. This happened because CEO Sam Altman returned to help save the company.
Majority of businesses are still at early stages of AI maturity: MIT study
Share link:In this post: Authors of the study categorized stages of AI advancement into four, with the majority of firms still in the initial stages. The study analyzed 721 companies at different stages of AI advancement. Companies become AI future-ready in the final stage.
DeFi security sees a 40% drop in losses as CeFi faces a $694M surge in breaches
Share link:In this post: DeFi crypto hacks account for about 20.4% of all crypto hacks in 2024, while CeFi’s adds up to 30%. CeFi losses have increased to $694 million in 2024. Access control exploits accounts for the loss of over $1.7 billion.
5 crypto predictions for 2025
These 5 crypto prophecies put Nostradamus to shame
Trending news
MoreCrypto prices
More
