USDC Still Primary Reserve On MakerDAO After Voting Process

• The MakerDAO community voted to favor USDC stablecoin as the main reserve
• 79% of MakerDAO’s community voted to maintain USDC as the primary reserve
• This poll was based on a proposal suggested by MakerDAO’s Risk Core Unit

Based on the outcome of a governance poll on MakerDAO, the DeFi giant’s community has overwhelmingly voted in favor of retaining the USDC stablecoin as the main reserve. In the poll that concluded on March 23 79.02% of MakerDAO’s community voted to maintain USDC as the main reserve, while 20.69% supported diversification across many stablecoins.

The poll was based on a proposal by MakerDAO’s Risk Core Unit. That unit suggested distributing the network’s Peg Stability Module (PSM) stablecoin reserves across many assets. That may offer the benefits of diversification and risk distribution, where an impairment to one stablecoin may have a lesser impact on the network’s solvency.

Users think that the depegging recently seen by USDC in the wake of the Silicon Valley Bank collapse might have triggered this call for reserve diversification. Based on the core team, the proposal targets mitigating the risks associated with these developments.

The poll’s outcome indicates that the community is confident in the stability of USDC, which makes up a huge part of MakerDAO’s PSM assets, with nearly $3.07 billion locked in the stablecoin.

Apart from the risk diversification benefits of adopting a multiple reserve system, MakerDAO’s core team noted a few shortcomings that may arise, assuming the community agreed to adopt other stablecoins as a reserve, together with USDC. Based on the team, considerable minting and redemptions over a short period might present challenges to the issuers of MakerDAO’s other PSM assets, GUSD, and USDP.

Another possible setback that may affect user experience may be the imposition of fees for USDC to DAI swaps.

The poll results that the MakerDAO community is more comfortable with the risks linked with the single primary reserve, which features the possibility of introducing a debt ceiling breaker in the event of another depeg risk event.

That would need concentrating minting capacity in the USDC PSM and reducing available liquidity. It might also create a risky scenario for collateralized vaults whenever DAI spikes upward.