DeFi Leader MakerDAO Weighs Emergency Shutdown Following ETH Price Drop
A large drop in the price of ether is testing the feasibility of Ethereum's entire system of lending and borrowing.
MakerDAO has added a third asset to its decentralized finance (DeFi) platform, USD Coin (USDC), in response to the system’s flagship stablecoin, dai, continuing to float above its dollar peg.
MakerDAO could have planned for its "Black Swan" event last week.
While the system did not technically malfunction, a confluence of factors enabled a few opportunists to win the collateral auctions despite placing extremely low bids.
So many people were trying to use the Ethereum blockchain during Thursday’s market meltdown that many applications simply stopped working as intended.
MakerDAO is not pursuing its emergency shutdown option although the amount of uncollateralized dai continues to grow.
Demand for DeFi lending services built on ethereum shows a pattern of inverse relationship to the price of ETH. When ether prices are falling, the amount of ETH locked in DeFi tends to rise. Most recent data indicate the relationship operates the other way, too.
WisdomTree, an asset manager specializing in exchange-traded funds, is vying to become one of the first established U.S. financial firms to offer clients digital assets, including a so-called stablecoin whose value is closely linked to the U.S. dollar.