Crypto Lender Maker Turns to Staked Ether to Reduce USDC Influence

The development is part of a move away from centralized crypto products such as stablecoins.

AccessTimeIconSep 13, 2022 at 2:09 p.m. UTC
Updated May 11, 2023 at 6:41 p.m. UTC
10 Years of Decentralizing the Future
May 29-31, 2024 - Austin, TexasThe biggest and most established global event for everything crypto, blockchain and Web3.Register Now

Crypto lending platform Maker, the world's largest decentralized-finance (DeFi) app, doubled the debt ceiling of its staked ether (stETH) vault this week as it looks to reduce its reliance on centralized stablecoins after Centre, the issuer of USD coin (USDC), blacklisted 38 addresses linked to sanctioned crypto tool Tornado Cash.

More than 34% of all assets locked on USDC are locked on Maker, and the tokens are the single-largest source of collateral that backs DAI, Maker’s native decentralized stablecoin pegged to the U.S. dollar. Approval of the proposal to raise the ceiling to $200 million allows more stETH to be deposited against DAI, reducing USDC’s influence.

This role of USDC in the system has led to criticism for DAI among market observers, with some even terming it “wrapped USDC” – or an alternative for USDC tokens. Erik Vorhees, the founder of crypto trading platform ShapeShift, has publicly appealed for Maker to start “unwinding its USDC collateral immediately.”

“There’s a natural tension between centralized stablecoins and projects like DAI that want to be permissionless and uncensorable,” Maker founder Rune Christensen said in a CoinDesk TV interview in August. The decision to lean on USDC allowed Maker to grow and focus on an easy user experience, but that came with trade-offs that are now fully visible, he said.

Some $49 million worth of stETH has flowed into the vault since the ceiling was raised, data from tracking service Daistats shows. Staked ether is a token supplied to users who lock up ether on Lido, a staking service, and receive the stETH tokens in return. More than 245,377 stETH is locked on Maker, the data shows. Maker has a total value locked of $8.4 billion.

The stETH vault has a 0% stability fee, meaning users don't have to pay fees to Maker on their positions. This essentially creates “free dai” for users, Maker said in a Tuesday tweet.


Disclosure

Please note that our privacy policy, terms of use, cookies, and do not sell my personal information has been updated.

CoinDesk is an award-winning media outlet that covers the cryptocurrency industry. Its journalists abide by a strict set of editorial policies. In November 2023, CoinDesk was acquired by the Bullish group, owner of Bullish, a regulated, digital assets exchange. The Bullish group is majority-owned by Block.one; both companies have interests in a variety of blockchain and digital asset businesses and significant holdings of digital assets, including bitcoin. CoinDesk operates as an independent subsidiary with an editorial committee to protect journalistic independence. CoinDesk employees, including journalists, may receive options in the Bullish group as part of their compensation.

Shaurya Malwa

Shaurya is the Deputy Managing Editor for the Data & Tokens team, focusing on decentralized finance, markets, on-chain data, and governance across all major and minor blockchains.


Learn more about Consensus 2024, CoinDesk's longest-running and most influential event that brings together all sides of crypto, blockchain and Web3. Head to consensus.coindesk.com to register and buy your pass now.