MakerDAO governance community has agreed to remove renBTC, the Bitcoin token issued by Alameda Research’s Ren Protocol, as a collateral asset for the decentralized stablecoin, Dai.
Maker to offload renBTC from Dai’s reserve
On Monday, the risk core unit of Maker proposed parameters to offloading renBTC from the stablecoin’s assets, citing the growing level of uncertainty Ren project following the collapse of Alameda. The decision was also made as a precautionary measure to protect Dai’s reserve from possible depeg in renBTC price to Bitcoin.
The governance community showed full support for the proposal in the poll which ended on November 24th. Thirty people participated in the exercise, casting 74,974 MKR Voting (100.0%) in agreement for renBTC to be offloaded. “With Alameda filing for bankruptcy and the elevated risk of renBTC depegging, we support offboard renBTC as collateral to minimise risk to the platform,” one of the recognized MakerDAO delegates commented.
Maker’s Risk Core team said the situation is not an emergency, however, they must move fast with the procedures. According to them, there are currently 14 open vaults 3 with 851,000 Dai debt, ranging from 180-400% in collateral ratio. The liquidation of these positions is expected to begin on December 7th.
Per the proposal, the liquidation ratio will be raised to 5000% to “guarantee liquidations will be triggered.”
DAI is backed by 18 crypto assets
Unlike centralized stablecoins like Tether (USDT) which is solely backed by the US dollar, Maker’s decentralized stablecoin is backed by a reserve of cryptocurrencies. Per a blog post updated in December 2020, the Dai stablecoin is supported by a basket of 18 digital currencies, including USDT, USDC, and Ether.
In August, MakerDAO also voted to reduce the stablecoin’s exposure to USD, beginning with USDC. This happened after Cirecle, the issuer of USDC, moved to block certain addresses that interacted with Tornado Cash.
At press time, DAI was valued at $1, with a market capitalization of $5.7 billion. However, the price has mostly traded at levels slightly lower than the peg value.