Stablecoin Issuer MakerDAO Votes to Retain USDC as Primary Reserve Even After Depeg

The MakerDAO community favored keeping the USDC stablecoin as the primary reserve asset for its DAI stablecoin, the protocol’s governance site showed on Thursday.

Some 79% of participants backed the decision in a ranked-choice vote, with the rest preferring to diversify the reserves.

MakerDAO is a decentralized autonomous organization that manages the lending platform Maker through proposals and votes. Maker issues the $5.3 billion stablecoin DAI, backing its value with digital assets from borrowers and, increasingly, with real-world assets such as liabilities from traditional financial institutions like banks.

USDC, the $35 billion stablecoin issued by Circle Internet Financial and backed by cash and short-term U.S. government bonds, is the most widely used stablecoin in decentralized finance (DeFi). It is also the largest reserve asset in DAI’s Peg Stability Module (PSM), which contains $3 billion of the tokens.

The vote follows a turbulent period earlier this month when multiple stablecoins including DAI and USDC temporarily lost their dollar price peg on exchanges after Circle’s key reserve banking partner, Silicon Valley Bank, collapsed.

Read more: Why Stablecoin USDC’s Unstable Weekend Matters

Thursday’s decision means Maker reverses emergency measures taken during the stablecoin crisis. The new conditions to mint DAI tokens through the PSM are closer to the previous parameters, according to the proposal.

Before the vote concluded, some MakerDAO voters expressed concerns about relying too heavily on USDC.

“Issuer diversification is one of the only immediate risk mitigation strategies MakerDAO can apply quickly in a rapidly deteriorating environment for U.S. regulated issuers and their stablecoin products,” pseudonymous ACREinvest commented early Thursday.