MakerDAO founder Rune Christensen believes the Tornado Money sanctions are striking the protocol at severe risk.
Key Takeaways
- In accordance with shared Discord messages, Rune Christensen believes that MakerDAO wants to be ready for a DAI depeg following Tornado Money sanctions.
- Christensen hinted that the protocol became endangered by its USDC reserves.
- MakerDAO’s treasury for the time being has more than $3.5 billion USDC.
The U.S. Treasury Department’s sanctions towards Tornado Money possess led MakerDAO founder Rune Christensen to occupy that the DAI creator is endangered by its $3.5 billion value of USDC collateral.
$3.5 Billion Price of USDC Reserves
Rune Christensen is shy that the Tornado Money sanctions are striking MakerDAO in a unhealthy win 22 situation.
In two messages posted on Discord and later shared by Yearn.Finance developer banteg on Twitter, the DAI issuer’s founder hinted that the protocol became endangered by its USDC reserves following U.S. sanctions towards Tornado Money. “I’ve been doing more learn on the penalties of the [Tornado Cash] sanction and unfortunately it is more severe than I first notion,” Christensen wrote earlier than declaring that MakerDAO ought to “significantly place in mind making ready” for an tournament valid through which DAI would perchance lose its peg towards the greenback.
Banteg additionally said that MakerDAO became weighing a “$3.5 billion ETH market clutch,” indicating that Christensen would perchance occupy the protocol ought to sell its USDC reserves for ETH. USDC for the time being accounts for 32.7% of MakerDAO’s treasury reserves. The protocol has more than $11 billion of collateral in its treasury.
The premise of converting USDC to ETH became criticized by notorious participants of the crypto neighborhood. Ethereum creator Vitalik Buterin said that in case of an ETH stamp drop, the “whole blueprint would risk turning valid into a fractional reserve.”
MakerDAO is a decentralized stablecoin issuer. By posting collateral, users are allowed to mint the DAI cryptocurrency, which targets to consistently stay on parity with the U.S. greenback.
The pattern comes after the U.S. Treasury Department added privacy protocol Tornado Money to its list of sanctions on Monday. This triggered Circle, the centralized stablecoin issuer of USDC, to freeze the USDC in Ethereum addresses that had interacted with the protocol.
Disclosure: At the time of writing, the creator of this piece owned ETH and several hundreds of cryptocurrencies.
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