Adding PSM-USDC-A DC Increase into Executive today

Hey all,

PSM-USDC-A debt exposure is increasing at a pretty rapid pace and is at 2.4bn currently. About 300m was minted in just the last two days. I have to say it is a bit surprising considering prices are more or less flat lately. It seems there is an increased stablecoin demand in general and any upcoming price shock will only increase it further.

It feels the 600m buffer won’t be enough until the next possible executive vote becomes effective in about 10 days. At the same time the latest PSM debt ceiling poll shows support for a larger increase of PSM-USDC-A debt ceiling.

I’d propose to increase PSM-USDC-A DC for another 1bn today and hopefully that should be enough until we have a poll ended and make a final larger increase.

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According to some anecdotal evidences, discussions I had with institutions and the following chart (relative distribution of DAI per activity, you can see lending growing), it is my view that traditional finance is hunting for yield on DeFi. While you need at least 2 digits to be noticed by crypto-twitter, those guys are fine with 2% as the risk-free rate (3-month t-bills) is 0.02%.

So this is a trend that will continue for months I guess and it is great that DAI is perceived as strong enough for those activities.

Failure to keep the peg would probably backlist us from institutions for months/years. While, last year, a lot of farmers were delta-hedged (using ETH to generate DAI to lend on Compound, so the price of DAI is not super important), I don’t think this is the case here. Institutions are expecting DAI to be $1.

But obviously, this is not something we should be complacent with and it is good that all stakeholders look for solutions to this issue.

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Yes, agree but In meantime can we prepare some rate cut? As the one coming Monday are probably not going to be enough.

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Yes. We need breathing room in the PSM. Full support.

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The rise in USDC in the PSM is getting to the point that it is disconcerting. Counterparty risk is rising substantially. I don’t know what the alternative is since it’s a necessity to maintain the peg. It seems MakerDAO is caught between a rock and a hard place.

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Painfully I echo this.

It is my hope that a new wave of LendCOs step forward to deploy capital in a secured manner that we can scale. 6s will do its part, but it cannot do it alone (nor should it, nor do I want it to).

Every dollar deployed that maintains a perfected security interest in community approved collateral is a USDC that should be pulled out of the PSM (+/-).

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Hey EJ — check out this weeks G&R call—PE is looking at the possibility of a Uni v3 Fix Spread Token to create an LP token that will create a Vault to possibly suck some USDC from the PSM—the angle is to remove the blacklist risk—see minute 11:30 you’ll get a better explanation by Mooney and Sam than I can ever provide.

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Visor Finance allows single sided asset deposits into UNI v3 LPs. They auto-compound and adjust price ranges using bollinger bands every hour. This effectively makes NFTs fungible again. I expect a lot more innovation using DeFi NFTs and hope MakerDAO is open to lending against these positions. Aave has already said they will lend on NFT collateral.

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