• Dapps:16.23K
  • Blockchains:78
  • Active users:66.47M
  • 30d volume:$303.26B
  • 30d transactions:$879.24M

AaveDAO Discusses Dai Collateral Limit Amid $600M Mint with Backing of eUSD

user avatar

by Giorgi Kostiuk

a year ago


The Aave decentralized autonomous organization (AaveDAO) is currently debating the collateral limits for Dai within their platform. Chaos Labs, a risk management consultant, has put forth a proposal to decrease Dai loan-to-value ratios by 12%, while Aave Chan initiative founder Marc Zeller had earlier suggested a 75% reduction.

Aave is a cryptocurrency lending platform that operates across various blockchain networks, allowing users to borrow in one cryptocurrency while using another as collateral. AaveDAO is governed by holders of the Aave token. Dai, an algorithmic stablecoin, is backed by various forms of crypto collateral including USDC, Ethereum, among others, and is issued through the Maker protocol governed by MakerDAO.

On April 2, MakerDAO faced criticism after minting 600 million DAI and depositing it in a vault with the Morpho protocol. MakerDAO had proposed increasing the vault's minting limit to 1 billion DAI through a forum post on April 1.

The debate primarily centers around the risk associated with eUSD, the stablecoin backing the newly minted Dai. Despite MakerDAO's assurance that eUSD offers stable collateral, critics argue against the use of eUSD claiming it poses risks to the system.

A proposal put forward by Zeller on April 2 suggests setting the Aave LTV for Dai at zero rather than the current 75%, effectively prohibiting Dai as collateral for new Aave loans. However, the proposal is still under discussion and has not proceeded to a formal vote.

Chaos Labs recommended a 12% reduction in LTV for Dai on April 5, enabling borrowers to use Dai as collateral with a higher collateral-to-loan ratio to offset perceived risks. Currently, Dai depositors can borrow up to 75% against their Dai, but the proposal would reduce this to 63%.

The stability of eUSD, protected through Lido Staked Ether and futures short positions, remains a topic of debate. While protocols assert that it's "delta neutral," critics caution about under-collateralization risks during a bear market or stETH devaluation.

During a public forum on April 3, discussions involving MakerDAO, Ethena, Morpho, and Aave Chan took place, addressing concerns over the risks eUSD may introduce to the ecosystem. No formal vote has been scheduled yet for the proposal to adjust Dai LTV in Aave.

0

Rewards

chest
chest
chest
chest

More rewards

Discover enhanced rewards on our social media.

Other news

Tampered Cold Wallets on Douyin Lead to $7 Million Theft

chest

SlowMist reported a $7 million theft due to tampered cold wallets sold on Douyin.

user avatarGiorgi Kostiuk

James Wynn: How High-Risk Trades Led to Massive Losses

chest

Crypto trader James Wynn suffered massive losses amounting to hundreds of millions, leading to his X account deletion.

user avatarGiorgi Kostiuk

Ethereum: Falling Wedge and Possible $3,100 Breakout

chest

Ethereum forms a falling wedge that could lead to a breakout and price rise to $3,100.

user avatarGiorgi Kostiuk

Cardano (ADA) Exhibits Growth Breaking Resistance at $0.70–$0.72

chest

Cardano (ADA) exits a descending channel, breaching key levels. A rise towards $0.90–$1.20 is anticipated.

user avatarGiorgi Kostiuk

Launch of KenyaNDT: Kenya's Digital Token on Solana Blockchain

chest

Kenya introduced its national digital token KenyaNDT aimed at financial inclusion and support for digital trade.

user avatarGiorgi Kostiuk

Bitcoin Hits Records, Cardano and XRP Experience Significant Growth

chest

Bitcoin's recent surge leads to increased interest in altcoins, notably Cardano and XRP.

user avatarGiorgi Kostiuk
dapp expert logo
© 2020-2025. DappExpert. All rights reserved.
© 2020-2025. DappExpert. All rights reserved.

Important disclaimer: The information presented on the Dapp.Expert portal is intended solely for informational purposes and does not constitute an investment recommendation or a guide to action in the field of cryptocurrencies. The Dapp.Expert team is not responsible for any potential losses or missed profits associated with the use of materials published on the site. Before making investment decisions in cryptocurrencies, we recommend consulting a qualified financial advisor.