The popular crypto lending platform, Maker, has doubled its debt ceiling on the staked Ethereum (stETH) vault. Maker is the most significant decentralized finance (DeFi) protocol behind creating DAI stablecoin.
Maker aims to move away the attention of investors and traders from stablecoins like USDC by reducing usage and reliance. The DeFi protocol has taken this move after USDC’s issuer Centre blocked 38 wallet addresses linked to the Tornado cash money laundering.
USDC Led Criticism
Staked Ethereum is a forked Ethereum representing one ETH that has been staked ahead of the merge, Ethereum’s mainnet’s upcoming upgrade. Nearly 34% of total assets locked on Maker are locked on USDC, making it the most considerable collateral that powers Maker’s stablecoin DAI, pegged to the U.S. dollar.
To reduce the dominance and reliance of USDC on the platform, Maker has doubled its debt ceiling to $200 million, offering users more stETH to be deposited against DAI after the approval of the proposal.
USDC has produced criticism for DAI in the crypto market by an alternative USDC token termed ‘wrapped USDC.’ Erik Vorhees, the founder of crypto trading platform ShapeShift, has advised Maker to begin “unwinding its USDC collateral immediately.”
Rune Christensen, the founder of MakerDAO, said, “There’s a natural tension between centralized stablecoins and projects like DAI that want to be permissionless and uncensorable.” He also added, “The market may finally start to reward decentralization to the point where risks are acceptable because USDC is no longer the no-brainer it used to be.”
A Remarkable Move From Maker
According to the data of DAI stat, the WSTETH-B vault, where users can deposit collateral, now gathered a supply of over 245,000 stETH, or nearly $392 million. The Tornado cash’s money laundering has forced Maker to shift its staking plans. Analysts at Maker said, “The US OFAC agency’s imposition of sanctions on Tornado Cash smart contracts…could indicate increasing risk for direct holdings of censorable assets such as USDC.”
It is to be noted that the stETH vault offers users a 0% stability fee, meaning stakers don’t require to pay any fees to hold positions, which eventually creates ‘free DAI.’ It is anticipated these efforts from Maker will reduce the amount of USDC collateral deposited against Maker’s native and governance token DAI.