In a remarkable emergency move, MakerDAO steps in to protect DAI from potential de-pegging.
On October 31st, the USDC reserves of DAI unexpectedly dropped below $60 million. This raised concerns about the stability of the DAI stablecoin as it requires over $200 million in collateral to be considered secure.
Recognizing the urgency of the situation, MakerDAO quickly transferred $250 million from Coinbase Custody to the DAI's Stability Module (PSM). As of now, MakerDAO's Coinbase Custody account holds only $250 million.
*PSM is a collateral asset pool that allows users to mint USDC for DAI at a 1:1 ratio and trade DAI at its dollar peg price. If the PSM reserves run dry, the price of DAI can potentially rise above or fall below $1.
Fortunately, MakerDAO's swift emergency action has prevented DAI from de-pegging. The immediate threat has been partially averted. However, Allan Pedersen, the CEO of DeFi lending firm Monetalis, subsequently made several comments on forums requesting SHRM trustees, who manage the PSM, to support it. Still, SHRM trustees have yet to respond.
It's worth noting that between October 29th and October 31st, over $100 million left the PSM before the emergency assistance from Coinbase Custody arrived. Notably, this money seemed to be heading towards centralized exchanges.
On the Maker forum, Allan Pedersen announced that the project team is working to automate the PSM through smart contracts. However, he mentioned, "Automating PSM is still reliant on delegate signers, administrators, legal structures, and centralized bank/exchange entities, and remains secure and stable for now."