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The Defiant

DAI’s Reliance On USDC Drops Below 10% As MakerDAO Expands Bond Holdings

Protocol Purchased $700M Of Treasuries Last Week

By: Samuel Haig

DAI’s Reliance On USDC Drops Below 10% As MakerDAO Expands Bond Holdings

MakerDAO’s DAI, the top decentralized stablecoin, has drawn down its USDC collateral to 9.4% after starting the year at 51%.

Circle’s USDC is now the seventh-largest collateral asset backing DAI. Real-world assets are now DAI’s largest source of collateral, with 36% of its $8.4B in assets, of which 70% consist of short-term U.S. Treasury bonds. Ether is second with 11.4%, and Lido’s liquid staking token stETH also accounts for 9.8% of DAI’s backing.

Last week, MakerDAO purchased an additional $700M worth of bonds, upping its Treasury holdings to $1.2B.

“These diversification efforts help Maker to maintain and secure a robust peg for DAI,” MakerDAO told The Defiant.


Despite Maker’s efforts to reduce its USDC exposure, centralized stablecoins still account for more than 30% of DAI’s backing, with USDP and GUSD each making up 10.6% and LP tokens for DAI/USDC on Uniswap representing 2.2%.

DAI collateral asset composition

However, MakerDAO passed a proposal on June 19 to reduce the debt ceiling for USDP to 0, which will reduce exposure over time.

DAI is the third-largest stablecoin with a circulating supply of $4.7B.

‘Wrapped USDC’

USDC quickly emerged as a major source of DAI’s backing after MakerDAO added support for the stablecoin in March 2020 after a sharp drop in the price of ETH resulted in DAI becoming undercollateralized. Detractors began likening DAI to “Wrapped USDC” and questioning the decentralization of a token heavily backed by centralized assets.

Concerns surrounding DAI’s exposure to the centralized stablecoin were realized in March when DAI depegged alongside USDC and briefly traded below $0.90. The depeg was triggered by fears the failures of Silvergate Bank and Silicon Valley Bank could threaten Circle’s ability to access USDC’s reserves. USDC represented 40% of MakerDAO’s collateral at the time.

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MakerDAO responded to the incident by implementing emergency measures to reduce its exposure to USDC, in addition to allowing USDC’s debt ceiling to drop to 0 in the future. “The proposed changes are intended to limit Maker’s exposure to potentially impaired stablecoins and other risky collaterals,” the proposal said.