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ForkLog regular contributor Dmitry Bondar analyzed the current position of the DAI stablecoin from MakerDAO. In the first weeks of May, DAI supply fell 28%, according to Daistats
ForkLog regular contributor Dmitry Bondar analyzed the current position of the DAI stablecoin from MakerDAO.
In the first weeks of May, DAI supply fell 28%, according to Daistats data.
“I think it is the holders of floating collateral who have decided not to risk loss from liquidation of their positions,” Bondar said.
At the time of analysis, the overall DAI collateralization rate is around 129%. However, the following should be considered:
Therefore, the current supply of DAI is secured by central stablecoins, where the bear market is not so dire.
At the same time, 10.7% of the tokens are still backed by Ethereum and 5.3% by WBTC.
“The time to start worrying about DAI is when Ethereum and Bitcoin are down 50% from their current prices, or when Ethereum and Bitcoin holders begin to withdraw some of their collateral, lowering their collateral rates and increasing the risk of liquidation loss.” has been registered.
He considers such a scenario possible only in the event of investor panic and a rapid market collapse, when MakerDAO borrowers consider the “today’s income” from the sale of the maximum possible portion of the collateral to be greater than the “to-morr’s loss” from liquidating the remainder. situation:
“In this case, gradual liquidations are possible – large collateral sales could further depress Ethereum and Bitcoin, which could lead to the liquidation of safer positions and so on in a death spiral.”
Recall that on June 13, Celsius crypto lending platform suspended withdrawals, swaps and transfers between accounts “due to extreme market conditions”.
CoinMetrics noticed Celsius running one of the largest WBTC vaults in MakerDAO. Because of this assurance, the platform issues DAI. To avoid liquidation, Celsius increased the amount of WBTC in the vault from around 18,000 to 24,000 in June.
At MakerDAO, the platform increased the amount of collateral, raising the cash clearing price to $14,000 per WBTC.
Georgetown University law professor Adam Levitin believes that liquidating the MakerDAO loan for Celsius is more expensive than raising the collateral, but MakerDAO’s bankruptcy is almost inevitable.
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Source: Fork Log
I’m Sandra Torres, a passionate journalist and content creator. My specialty lies in covering the latest gadgets, trends and tech news for Div Bracket. With over 5 years of experience as a professional writer, I have built up an impressive portfolio of published works that showcase my expertise in this field.
