OMG What Just Happened??? MakerDAO Issues Emergency Proposal After USDC Crazy Depegging Incident

It’s been a wild week in the crypto world! From JoJos to backwards beavers, we thought we had seen it all. But it looks like the craziness is far from over.

Just take a look at what happened recently with MakerDAO and USDC stablecoin. Apparently, they had some new “depegging” incident and now MakerDAO is dealing with a whopping $3.1 billion in collateral!

What Is “Depegging”?

Before we get into the huge situation MakerDAO found themselves in, let’s unpack “depegging” first. Depegging is a term used when the value of a currency (in this case a stablecoin) is no longer equal to its fiat “peg”. This is usually due to market fluctuations or outside factors.

How Did The Incident Affect MakerDAO?

When MakerDAO noticed the USDC was depegging, they were quick to take action. They actually issued an emergency proposal in order to address the collateral in the $3.1 billion backlog. This proposal included:

  • Reverting the USDC Peg: MakerDAO quickly reverted the USDC peg to its original fiat rate.

  • Monitoring Risk: MakerDAO started closely monitoring risk associated with USDC and the crypto markets.

  • Adjusting the Debt Ceiling: MakerDAO adjusted their debt ceiling to a more conservative level.

What Was The Final Result?

Thankfully, MakerDAO were able to take all the necessary steps to keep their collateral safe. Not only that, but they were also able to make sure that their users could still use their volatility buffer. In the end, everyone was able to stay cool, calm, and collected.

So, if you were worried about MakerDAO’s $3.1 billion USDC collateral incident, then you can rest easy. They were able to get it sorted out with their emergency proposal. Now all we can say is, thank goodness for MakerDAO!

Phew, what a crazy ride!