MakerDAO, Gemini exchange as a result of the current liquidity crisis facing the lending platform Earn. DAI launched two governance votes designed to limit the stablecoin’s exposure to Gemini.
Gemini dollar so GUSD, It is one of the collateral assets used to mint the DAI stablecoin issued by the Maker protocol. Gemini and Maker entered a partnership last year where Maker earned 1.5% when GUSD collateral at Maker PSM exceeded $100 million.
MakerDAO Members Want To Decouple DAI Stablecoin’s Relationship With Gemini
PSM stands for peg stability module and is a mechanism by which users can print DAI against any collateral accepted by Maker. PSM also maintains the DAI’s parity with the US dollar.
GUSD collateral in the Maker protocol is currently $489 million versus the $500 million debt limit, which is the maximum amount of DAI that can be minted in Gemini dollars.
MakerDAO members say DAI’s dependency on Gemini and the $900 million in Earn program are in trouble cryptocurrency They expressed concern about the potential bankruptcy risks associated with being locked up at credit institution Genesis Global Capital.
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Gemini CEO Tyler Winklevoss took the move to allay such fears, saying in a post on the Maker forum that MakerDAO’s exposure to Gemini is limited to GUSD at PSM. Winklevoss added that the GUSD reserve backing DAI is not the property of the company and therefore will not be part of any bankruptcy proceedings.
Due to bankruptcy concerns about Gemini, two different management votes were opened on MakerDAO. The initial vote requested that the fee charged for converting the DAI stablecoin into collateral asset be reduced to zero. If this vote passes, users will be able to convert their DAI tokens to GUSD free of charge.
The second vote is about reducing the debt ceiling, which is currently $500 million.
*Not investment advice.