{"id":254124,"date":"2022-08-11T03:00:58","date_gmt":"2022-08-11T02:00:58","guid":{"rendered":"https:\/\/cryptoslate.com\/?p=254124"},"modified":"2023-06-23T22:43:46","modified_gmt":"2023-06-23T21:43:46","slug":"makerdao-plans-against-sanctions-from-usdc-exposure","status":"publish","type":"post","link":"https:\/\/cryptoslate.com\/makerdao-plans-against-sanctions-from-usdc-exposure\/","title":{"rendered":"MakerDAO plans against sanctions from USDC exposure"},"content":{"rendered":"<p>Following <a href=\"https:\/\/cryptoslate.com\/circle-blacklists-all-tornado-cash-eth-addresses-effectively-freezing-usdc\/\">Circle's freeze<\/a> of blacklisted Tornado Cash addresses, MakerDAO is re-assessing the risks associated with its USDC collateral.<\/p>\n<p>On August 8, issuers of USDC stablecoin Circle froze <a href=\"https:\/\/cryptoslate.com\/circle-blacklists-all-tornado-cash-eth-addresses-effectively-freezing-usdc\/\">USDC tokens<\/a> belonging to <a href=\"https:\/\/home.treasury.gov\/policy-issues\/financial-sanctions\/recent-actions\/20220808\">38 wallet<\/a> addresses blacklisted by the <span style=\"font-weight: 400;\">U.S. Treasury Department. One of the wallets was identified as a <\/span>DAI Tornado pool. As a result, there have been concerns from the MakerDAO community about their exposure to USDC and the risk of being hunted by regulators.<\/p>\n<blockquote class=\"twitter-tweet\">\n<p dir=\"ltr\" lang=\"en\">Dear <a href=\"https:\/\/twitter.com\/MakerDAO?ref_src=twsrc%5Etfw\">@MakerDAO<\/a> <a href=\"https:\/\/twitter.com\/search?q=%24DAI&src=ctag&ref_src=twsrc%5Etfw\">$DAI<\/a> community&#8230; you should start unwinding your USDC collateral immediately, converting it into stables that are more censorship resistant.<\/p>\n<p>You have some time to do it, but you need to get started.<\/p>\n<p>\u2014 Erik Voorhees (@ErikVoorhees) <a href=\"https:\/\/twitter.com\/ErikVoorhees\/status\/1556755111518474241?ref_src=twsrc%5Etfw\">August 8, 2022<\/a><\/p><\/blockquote>\n<p>In response, the community has been actively engaged in deep discussions via the Discord channel on the way forward.<\/p>\n<h2>DAI's exposure to USDC and sanction risk<\/h2>\n<p>DAI's market capitalization of $7.5 billion makes it the largest <a href=\"http:\/\/cryptoslate.com\/cryptos\/defi\">DeFi protocol<\/a> by total value locked.\u00a0 It is currently collateralized by <span style=\"font-weight: 400;\">\u00a033.9% USDC, 23.2% ETH, and 7.6% WBTC, among other assets. With <a href=\"https:\/\/daistats.com\/#\/overview\">$3.56 billion<\/a> USDC locked in the Maker protocol, USDC represents the largest source of collateral.\u00a0<\/span><\/p>\n<p>The sustainability of DAI is under question as it is heavily backed by collateral that regulators can censor. MakerDAO delegate Chris Blec believes it could lead to a sanction on DAI<\/p>\n<blockquote><p>\u201cGood luck not getting sanctioned when DAI is already sitting in sanctioned smart contracts that can\u2019t be paused,\u201d Blec added.<\/p><\/blockquote>\n<p>Another issue brewing in the community concerns Maker's Peg Stability Module (PSM). The PSM allows users to swap a given collateral type directly for DAI at a fixed rate. At the moment, Maker's USDC PSM contract holds<a href=\"https:\/\/daistats.com\/#\/overview\"> 3.56 billion USDC.<\/a><\/p>\n<p>Since some DAI users interacted with Tornado Cash through the USDC PSM, the contract could be implicated in the case of a probe. If a sanction has to blacklist the PSM, the <a href=\"http:\/\/cryptoslate.com\/cryptos\/defi\">DeFi market<\/a> as a whole could be at risk of contagion.<\/p>\n<h2>An emergency Shutdown is likely<\/h2>\n<p>According to MakerDAO founder <a href=\"https:\/\/cryptoslate.com\/people\/rune-christensen\/\">Rune Christensen<\/a>, while the protocol may not resist sanctions in the short run, it will take immediate actions to prepare against potential attacks. Rune said:<\/p>\n<blockquote><p>&#8220;The best option is to count on not getting sanctioned now, and then work on the fundamentals we need to have in place to be able to actually resist a real physical attack. We should just accept that if they want to shut us down, the outcome is [an] emergency shutdown.\u201d<\/p><\/blockquote>\n","protected":false},"excerpt":{"rendered":"<p>Following Circle&#8217;s freeze of blacklisted Tornado Cash addresses, MakerDAO is re-assessing the risks associated with its USDC collateral. On August 8, issuers of USDC stablecoin Circle froze USDC tokens belonging to 38 wallet addresses blacklisted by the U.S. Treasury Department. One of the wallets was identified as a DAI Tornado pool. As a result, there [&hellip;]<\/p>\n","protected":false},"author":1378,"featured_media":254229,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[77974,11,32631],"tags":[],"prediction_market_topic":[],"post_folder":[],"acf":[],"yoast_head":"<!-- This site is optimized with the Yoast SEO Premium plugin v21.9 (Yoast SEO v21.9.1) - https:\/\/yoast.com\/wordpress\/plugins\/seo\/ -->\n<title>MakerDAO plans against sanctions from USDC exposure<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/cryptoslate.com\/makerdao-plans-against-sanctions-from-usdc-exposure\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"MakerDAO plans against sanctions from USDC exposure\" \/>\n<meta property=\"og:description\" content=\"Following Circle&#039;s freeze of blacklisted Tornado Cash addresses, MakerDAO is re-assessing the risks associated with its USDC collateral. On August 8, issuers of USDC stablecoin Circle froze USDC tokens belonging to 38 wallet addresses blacklisted by the U.S. Treasury Department. One of the wallets was identified as a DAI Tornado pool. As a result, there [&hellip;]\" \/>\n<meta property=\"og:url\" content=\"https:\/\/cryptoslate.com\/makerdao-plans-against-sanctions-from-usdc-exposure\/\" \/>\n<meta property=\"og:site_name\" content=\"CryptoSlate\" \/>\n<meta property=\"article:published_time\" content=\"2022-08-11T02:00:58+00:00\" \/>\n<meta property=\"article:modified_time\" content=\"2023-06-23T21:43:46+00:00\" \/>\n<meta property=\"og:image\" content=\"https:\/\/cryptoslate.com\/wp-content\/uploads\/2022\/08\/makerdao-usdc-dai.jpg\" \/>\n\t<meta property=\"og:image:width\" content=\"1200\" \/>\n\t<meta property=\"og:image:height\" content=\"630\" \/>\n\t<meta property=\"og:image:type\" content=\"image\/jpeg\" \/>\n<meta name=\"author\" content=\"Christian Nwobodo\" \/>\n<meta name=\"twitter:card\" content=\"summary_large_image\" \/>\n<meta name=\"twitter:creator\" content=\"@cryptoslate\" \/>\n<meta name=\"twitter:site\" content=\"@cryptoslate\" \/>\n<meta name=\"twitter:label1\" content=\"Written by\" \/>\n\t<meta name=\"twitter:data1\" content=\"Christian Nwobodo\" \/>\n\t<meta name=\"twitter:label2\" content=\"Est. reading time\" \/>\n\t<meta name=\"twitter:data2\" content=\"2 minutes\" \/>\n<script type=\"application\/ld+json\" class=\"yoast-schema-graph\">{\"@context\":\"https:\/\/schema.org\",\"@graph\":[{\"@type\":\"NewsArticle\",\"@id\":\"https:\/\/cryptoslate.com\/makerdao-plans-against-sanctions-from-usdc-exposure\/#article\",\"isPartOf\":{\"@id\":\"https:\/\/cryptoslate.com\/makerdao-plans-against-sanctions-from-usdc-exposure\/\"},\"author\":{\"@type\":\"Person\",\"@id\":\"https:\/\/cryptoslate.com\/author\/christian-nwobodo\/#person\",\"name\":\"Christian Nwobodo\",\"url\":\"https:\/\/cryptoslate.com\/author\/christian-nwobodo\/\",\"mainEntityOfPage\":{\"@id\":\"https:\/\/cryptoslate.com\/author\/christian-nwobodo\/\"},\"image\":{\"@type\":\"ImageObject\",\"@id\":\"https:\/\/cryptoslate.com\/author\/christian-nwobodo\/#authorimage\",\"url\":\"https:\/\/cryptoslate.com\/wp-content\/uploads\/2022\/12\/chriscen-author-300x300.jpg\",\"contentUrl\":\"https:\/\/cryptoslate.com\/wp-content\/uploads\/2022\/12\/chriscen-author-300x300.jpg\",\"caption\":\"Christian Nwobodo\"},\"jobTitle\":\"Journalist\",\"description\":\"Christian is a crypto-curious nerd who loves to investigate how protocols work under the hood. 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