The PSM would help against COMP, or any other disruptions to the peg if governance is willing to increase the debt ceilings of stablecoins enough to accomodate it. It means Maker governance will always have a “fix the peg” button available at all times, as an option.
It would have a big impact right now, even without further increases to debt ceilings by making sure that the approved 40 million debt ceiling for USDC would actually be used (as right now it is not used, likely due to the strict risk parameters)
And even with limited stablecoin debt ceilings, the existence of a large amount of stablecoins available to buy Dai at 1 USD makes the protocol more attractive to vault users, as it provides them guaranteed liquidity for their Dai even when generating large amounts of Dai at once.
This dynamic of guaranteed liquidity in fiat backed stablecoins at the peg is also crucial in cutting through the chicken and egg problem that exists with onboarding real world assets as collateral to the system, as real world loan originators need a large amount of liquidity before it becomes worth it to spend the enormous amount of effort that it would require to learn how to engage with the Maker protocol. The PSM helps provide this guaranteed liquidity directly, even if governance is unwilling to increase the stablecoin debt ceilings beyond the current 40 million. So it will in all circumstances be a big step forward towards solving the long term issues with the peg.
However, as a separate argument I do believe that it is absolutely the best option for maker governance to begin much larger scale onboarding of stablecoins as collateral (this works even better with the PSM due to the multiplier effects noted above, but even without the PSM it is better than doing nothing).
The alternative is to let the peg fail, or work towards implementing negative rates. To continue to let the peg fail is suicidal, as it is eroding the organic growth that the project has built up for years, and this erosion is happening at an accelerating pace as we now approach month 4 of a broken peg. I know the numbers look good right now on daistats, but what we’re seeing is that organic users are being replaced by artificial demand driven by compound.
Yet the dogma is that maker governance should just continue to let the peg fail, on the basis of an emotional argument that “centralized stablecoins are of the devil, and ETH is pure”, and keeping maker “pure” is more important than the delivering on the one promise that Maker governance has made to its userbase, which is to keep Dai stable at 1 USD.
The systemic reliance that ETH and BTC has on Tether and Binance is conveniently overlooked every single time someone argues against USDC as collateral, but the fact is that USDC, PAX and other regulated and legit stablecoins actually are among the only options for hedging the indirect exposure that Maker has to Tether and Binance right now.
IMO someone who is not willing to take action to fix the peg through higher debt ceilings and different risk parameters, should then argue for implementing negative rates (which I would completely respect, it’s just important to be realistic about how big of a challenge that actually is).
Just letting the peg fail is a betrayal of the users of the system, especially when it is being done based on a purist argument that ignores the role of Tether in crypto markets and the indirect exposure Maker has.
Edit: something that add that obviously needs to be clearly spelled out, is that of course no one would want to see a large concentration of stablecoins for a long time in the portfolio, just like it wouldn’t be good to have a lot of any other asset. The end goal in all cases is a diversified collateral portfolio.
But the whole point is that choosing to fix the peg in the short term through a lot of stablecoins, enables the ecosystem to then move forward to a state where a lot of e.g. real world assets can be onboarded to proper diversify the collateral portfolio.
Choosing to keep the peg broken, means choosing to wither and die by alienating all the organic users of the system who aren’t in on the purity-but-lets-ignore-tether religion.