MakerDAO Co-Founder: Considering Selling All $USDC in Protocol Tied to Tornado Cash Sanctions

MakerDAO co-founder Rune Christensen said on Discord channel that MakerDAO may sell all of its $USDC exposure in the protocol, a move that could see the $DAI abandoning its US dollar peg and the need to prepare for that scenario. According to Makerburn, 80% of the collateral assets behind $DAI are currently in stablecoin and 60% in $USDC. In addition, Rune Christensen said the recent US Treasury sanctions against crypto mixing service Tornado Cash was the reason for considering the pivot. According to Christensen, the sanctions are more serious than he originally considered. Centre, the consortium behind $USDC, froze $USDC funds in Tornado Cash wallets following the sanctions. Yearn.finance's core developer banteg tweeted that MakerDAO is considering a $3.5 billion $ETH market buy, converting all $USDC from the peg stability module into $ETH. Ethereum co-founder Vitalik Buterin said this seems like a risky and terrible idea. If $ETH drops a lot, value of collateral would go way down but CDPs would not get liquidated, so the whole system would risk becoming a fractional reserve.