“On October 31st, the USDC reserve of DAI unexpectedly dropped below $60 million, raising concerns about the stability of the DAI stablecoin, as DAI requires over $200 million in collateral to be considered safe.
Recognizing the worrisome situation, MakerDAO quickly transferred $250 million from Coinbase Custody to DAI’s Peg Stability Module (PSM). Currently, MakerDAO’s Coinbase Custody account has only $250 million remaining.
*PSM is a collateral asset pool that allows users to mint DAI 1:1 with USDC and trade DAI at its pegged value to the dollar. If the PSM reserves run dry, the price of DAI can fluctuate above or below $1.
While the immediate threat has been partially mitigated, Allan Pedersen, the CEO of the DeFi lending firm Monetalis, subsequently commented multiple times on the forum, requesting that the SHRM trustee company support the PSM. However, the SHRM trustee company has not yet responded.
It is worth noting that between October 29th and October 31st, over $100 million left the PSM before the Coinbase Custody bailout. Notably, this money seems to have been directed towards centralized exchanges.
On the Maker forum, Allan Pederson announced that the project team is working to automate the PSM using smart contracts, but currently, the automation relies on trustee user guides, administrators, legal structures, and central bank/exchange interactions, which remain safe and stable for now.”