MakerDAO co-founder recommends DAI-USD depegging to limit attack surface

MakerDAO cofounder Rune Christensen reached back to the community to explain why a free-floating DAI might be the best option for the decentralized autonomous organisation (DAO) in light of recent discussions about depegging its native token (USD Coin), amid sanctioning Tornado Cash.

Christensen revealed that he miscalculated the risk associated with risk-weighted assets in his blog post “The Path of Compliance & the Path of Decentralization : Why Maker must prepare to free float Dai.” He said:

“Physical crackdown on crypto can happen without advance notice and without any possibility of recovery for innocent, legitimate users.” This is a violation of two core assumptions that we used when understanding RWA risk. It makes the authoritarian threat even more serious.

Christensen acknowledged the protocol’s inability comply with regulators. However, he suggested that “we must choose decentralization as was always the intention and the purpose for Dai.”

DAI collateralization data. Source: Dai Stats

Decentralizing Maker, he believes, would lessen the impact of crackdowns against the overall protocol. He also stated that “The only option is to limit attack surface by reducing RWA coverage to a maximum fixed percent of the total collateral. This requires free floating away USD.”

Important to note is that USDC is collateralized for over half of DAI, according to data from daistats.

Related: MakerDAO should seriously consider depegging DAI USD from USD — Founder

Joey Santoro was the founder of Decentralized Finance (DeFi) platform Fei Protocol. He recommended that Tribe DAO participants be refunded for Fuze victims after they had been repaid.

Rari Fuze was previously offered a $10,000,000 bounty to return $80 million in assets. Fei Protocol did not respond.