MakerDAO has shifted $250 million from its Coinbase Custody account to replenish the collateral for its DAI stablecoin, following a drastic dip in the coin’s reserves. This move was triggered due to the collateral backing the DAI stablecoin falling below the intended levels.
A surge of liquidations forced MakerDAO to utilize half of its $500 million held in a Coinbase Custody account to safeguard the peg for its DAI stablecoin.
The USDC reserves of DAI, which are required to be above at least $200 million for security, almost dipped below $60 million on Tuesday morning. In response, the manager of Maker’s Coinbase trust transferred $250 million into DAI’s peg stability module (PSM).
The PSM, a collateral pool, allows users to mint USDC for DAI on a 1:1 ratio and supports the DAI to maintain its dollar peg. If the PSM’s reserves are depleted, DAI’s price can deviate from the dollar.
Allan Pedersen, CEO of the DeFi lending firm Monetalis, had earlier raised concerns on the Maker forum about the depletion of PSM’s funds and urged the trust management firm SHRM to replenish the PSM.
The process of replenishing the PSM involves multiple steps, including email and phone communication with SHRM, as outlined by a Maker document.
Pedersen noted on the forum that teams are working on automating the PSM using smart contracts to prevent such incidents in the future.
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