[Signal Request] adjust PSM-USDC-A for "whatever it takes to keep the peg"

Something conservative. And no, we don’t need 1 DAI at all times for instantaneous settlement. Just enough reserves to maintain the peg. Maybe that’s 80% of what’s in the PSM, maybe it’s 40%.

Lots of details that will need their own debates later, and better suited to a new thread.

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Would actually prefer to depeg at some point than become a USDC wrapper.


Maybe we should consider raising the fee to 0.15%, with the USDC PSM growing at this rate.


Almost all DeFi protocols ranging from AAVE to Curve have a large centralized stablecoin portion, so the problem is not unique to Maker per se.

Also, yes, maintaining peg is quite important for partners and etc. We still have many large partners that either took USDC or used to have Dai but chose USDC instead because the Dai peg broke so hard during DeFi summer.


Its a no-brainer only if we have something to use the proceeds from the debt sale.

Isn’t the total outstanding USDC around 23 B? Don’t substantial risk issues develop if we had a third or more of all USDC in our PSM? Aren’t we already pressing our luck on having 3 B all at one location?

Why not use the USDC to provide liquidity on Curve, Uniswap, or Aave/Compound?

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I can’t speak for others, but my worry is we’d move the market, which would devalue USDC and we just feed the PSM. I like a no-cost float (most insurance companies would kill for it), but I don’t want one based on recursive action

In theory if we move the market, usdc will go under 1. And circle would have to remove some usdc from the supply.

Not if we still have the PSM. It operates the same for appreciating USDC as it does for lowering DAI

Not really, the dai will go under peg as/with the usdc. We haven’t invented the infinity loop for making free money yet.

USDC is way more liquid around $1 that I don’t really think we have to worry about breaking their peg.

What about using Volmex’s ETHV and iETHV to hedge market price volatility? As ETH drops ETHV rises thereby mitigating the risk of insolvency due to bad debt. When volatility mean reverts the iETHV rises along with the price of ETH. Another source of income is being a Uniswap v3 LP on both pairs knowing that the impairment loss is actually impermanent.

Thanks everybody for participating in this Signal Request. I will now prepare an onchain poll in collaboration with @Risk-Core-Unit

It will very likely go live on 2021-06-20T22:00:00Z, I will update here accordingly.


The interesting thing about MKR that isn’t intuitive is that fee collection already goes up when ETH falls as CDPs liquidate (13% is a nice fee). I’m pretty sure it’s not necessary to hold ETHV as a hedge, but could definitely see it being possible to generate a CDP for ETHV someday.

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The corresponding onchain poll is now live in the voting portal. The poll will run until 2021-06-24T16:00:00Z - please participate there.


small update: the onchain poll passed, but as there is not going to be a weekly executive tomorrow (and the poll said it should be added in the next 30 days) it will not be included in an executive before next week.

will keep you updated once the corresponding onchain exec is available

We are going full Mario Draghi on the DAI peg.

update: the current executive vote is containing the changes from this Signal Request:

  • Maximum Debt Ceiling (line): 10 billion DAI
  • Target Available Debt (gap): 1 billion DAI
  • Ceiling Increase Cooldown (ttl): 24 hours

please help by putting your MKR onto the exec.

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Wow 10 billion DAI is a lot of money, I would prefer it not to be in stable currencies, but at the end of the day the market is the one who decides and we just give the options.