#DAI #USDC #Stablecoins #MakerDAO

In a recent announcement, the MakerDAO community has decided to maintain the USD Coin (USDC) as the primary reserve asset for the stablecoin, DAI. This decision was made after a period of instability in the market, during which DAI and USDC temporarily lost their parity with the US dollar.

More than half of the DAI in circulation were issued through USDC deposits in MakerDAO. While the community had considered replacing USDC with the stablecoin from Paxos, they ultimately decided to stick with USDC.

DAI is a stablecoin that seeks to maintain a price linked to the US dollar through a collateralization system. Unlike other stablecoins, such as USDC or Tether, DAI is based on a lending platform and a set of smart contracts on the Ethereum network to ensure its stability and decentralization.

Users can lock different types of crypto assets as collateral in Vaults to generate DAI. The users depositing these collaterals are required to maintain a minimum collateralization ratio to ensure that the amount of DAI in circulation is always backed by a greater value of assets.

When users want to retrieve their collateral, they must return the amount of DAI they generated, along with a stability fee. This stability fee acts as an incentive to maintain the balance between the supply and demand of DAI and ensure that its value remains close to the US dollar.

In addition to collateral in crypto assets, DAI has been incorporating real-world assets, such as liabilities from traditional financial institutions, to back its value. This allows DAI to have a broader and more diversified collateral base, which seeks to increase its resilience to market fluctuations and risks associated with specific crypto assets.

With USDC as the primary collateral for DAI, the MakerDAO community hopes to maintain stability and provide a secure and reliable stablecoin option for users.

Data from CryptoSlate shows that Tether's #USDT dupply has topped 74 billion for the first time since May 2022.

When its stablecoin competitors, such as #Binance USD (BUSD) and USD Coin (USDC), experienced regulatory attention and banking concerns during the previous 30 days, Tether's supply increased by almost 5 billion. Investors abandoned these troubled stablecoins as a result and switched to USDT because of its greater safety.

For reference, the supply of USDT increased by 10% this year while the supplies of USDC, BUSD, and DAI decreased.

The market share held by USDT has risen to 56.4%, the highest level since July 2021.

According to Santiment, a blockchain analytics company, there have recently been more whale transactions in Tether.

Santiment claims that during the last year, the stablecoin saw eight $1 billion transactions, half of which happened in the previous 10 days as numerous whales removed their USDT holdings from cryptocurrency exchanges in response to the failure of crypto-friendly institutions.

In addition, Tether's supply on exchanges decreased by 28.9% to a 10-month low as investors grew more confident in it as a result of USDC's difficulties.

The data from Santiment is supported by Curve 3pool's dashboard, whose liquidity pool is severely unbalanced.

The display shows that USDC and #DAI make up more than 90% of the pool while USDT only makes up 8.61%. This indicates that cryptocurrency investors favor keeping USDT over other stablecoins.

As it is intended for the unbalanced pool to include equal balances of all three stablecoins, it reveals the stablecoin preferences of cryptocurrency investors during times of market turbulence.

Despite increasing confidence from cryptocurrency investors in the stablecoin, uncertainty over its reserves still exists.

The stablecoin issuer reached a settlement with New York authorities on the backing of its dollar reserves in 2021. With the failure of Terra's algorithmic stablecoin, UST, the amount of hedge funds betting against Tether increased.

Investors at the time were concerned that the stablecoin may collapse, thus USDT honored almost $10 billion in redemption requests during a two-week period.

In addition, there have been concerns about whether Tether was exposed to any of the crypto companies that have collapsed.

The CTO of Tether, Paolo Ardoino, has emphasized that the stablecoin issuer has no connection to any of these businesses, not even the troubled banks that support cryptocurrencies. The company also stated that it has been the subject of "outdated, incorrect, and misleading coverage and claims" in a recent statement.