MakerDAO co-founder recommends to depeg DAI from USD

Rune Christensen, a MakerDAO co-founder, has reached out to the community in light of recent conversations about decoupling its native token from USD Coin (USDC) amid the sanctioning of Tornado Cash to explain why free-floating DAI may be the only option for the decentralized autonomous organization (DAO).

In his blog post titled “The Path of Compliance and the Path of Decentralization: Why Maker has no option but to Prepare to Free Float Dai,” Christensen acknowledged underestimating the hazards associated with risk-weighted assets.

“Physical crackdown against crypto can occur with no advance notice and with no possibility of recovery even for legitimate, innocent users. This violates two core assumptions that we used to understand RWA [risk-weighted asset] risk, making the authoritarian threat a lot more serious,” he stated.

Christensen said that the protocol must choose the route of decentralization, which was always the idea and the objective of Dai, as he admitted that the protocol was unable to abide by the regulators.

As per him, the only option left was to limit the attack surface by reducing RWA exposure to a maximum fixed percentage of the total collateral, which necessitated free floating away from USD.

MetaDAO token will provide justification “for why a free-floating currency should exist and why users should accept something that falls in value vs USD.” Also, it can incentivize more supply of Dai generated from decentralized collateral, which will help the community to scale up.

Christensen also believes that decentralizing Maker would lessen the impact of crackdowns on the overall protocol.

As reported earlier, the US Treasury imposed sanctions against the crypto mixer Tornado Cash, which met criticism from the crypto community. Some stablecoin issuers, GitHub, crypto infrastructure providers, and crypto exchanges have joined the Treasury action.

Notably, according to daistats, over 50% of DAI is now collateralized by USDC.