MKR holders vote to accept USDC as collateral in the Maker Protocol. ETH and BAT are two other collaterals allowed in the protocol. Maker Governance that decides essential options and features for Dai through voting accepted the USDC, and now the users can deposit this stablecoin to open Maker Vaults and generate Dai.
Examining the Risks
Adding a new cryptocurrency to a platform as collateral includes some risks. The executives or decision making communities should consider all the possibilities and risks before adding the new currency. Although USDC is a stablecoin backed by the US Dollar and doesn’t have the typical volatility of cryptocurrencies, accepting that as collateral needed more evaluating.
Maker community discussed the merits and risks of adding USDC as collateral in the Maker Governance Forum. According to MakerDAO announcement, the risks below were discussed in the community forum:
- Stability fee: 20% (annually)
- Collateralization ratio: 125%
- Debt ceiling: 20 million
- Liquidation penalty: 13%
- Collateral auction lot size:: 50,000 USDC
- Collateral auction minimum price change:: 3%
- Collateral auction bid challenge window: 6 hours
- Collateral auction maximum duration:: 3 days
- Dust: 20 (Dai)
Don’t forget that USDC stablecoin is a currency under the control of a centralized organization. Adding a kind of centralized to the Decentralized Finance movement (DeFi) as collateral, needed more meetings and discussions. So, the community even held a physical meeting to discuss this issue more.
Maker Protocol provides much flexibility that any tokenized asset can be added as collateral to the system. But the token should first be approved by the community named Maker Governance.
How to Participate
Users interested in depositing USDC and enabling Maker Vaults should first connect their wallets to Oasis Borrow app. Oasis provides a platform based on Ethereum that users can trade, borrow, and earn tokens using Dai in it.
Users can access Oasis through any Etereum-supported wallet. Oasis is a free platform, but users have to pay for gas in Ethereum transactions and other Maker Protocol fees like Stability Fees. Right now, Oasis supports Dai, Ethereum, Augur, 0x, BAT, and USDC.