#Table of Contents
On March 21, the MakerDAO community launched a public opinion poll on the standardization of PSM parameters. Option 1 of the proposal is to diversify the stable currency reserves o
On March 21, the MakerDAO community launched a public opinion poll on the standardization of PSM parameters. Option 1 of the proposal is to diversify the stable currency reserves of the Anchor Stabilization Module (PSM) to diversify risks and improve the flexibility of stable currency liquidity. Option 2 is to maintain the USDC as a primary reserve. Currently, the voting approval rate for Option 2 is 60.24%. The voting will end at 00:00 on March 23rd.
The MakerDAO community initiated a vote on “whether to diversify the existing PSM stable currency reserve dominated by USDC”
* Introduction
* What is MakerDAO?
* What is PSM?
* Why is standardization of PSM parameters important?
* The two options mentioned in the poll
* Voting results so far
* Conclusion
* FAQs
On March 21, the MakerDAO community launched a public opinion poll on the standardization of PSM parameters.
MakerDAO, a decentralized autonomous organization launched in 2015, has become a major player in the world of decentralized finance (DeFi) and is known for its stablecoin, Dai. On March 21, the MakerDAO community launched a public opinion poll regarding the standardization of PSM parameters. The poll has been launched to gather feedback from the community on how to diversify stable currency reserves and improve the flexibility of stable currency liquidity.
What is MakerDAO?
MakerDAO is a decentralized autonomous organization that allows users to issue Dai, a stablecoin pegged to the US dollar with a goal of maintaining a stable value over time. Dai is created by users depositing collateral in excess of the value of Dai they want to obtain. This collateral is held in a smart contract, and if the value of the collateral ever drops below the value of the issued Dai, the smart contract automatically liquidates the collateral to repay the Dai. MakerDAO is known for being one of the pioneers of the DeFi space and has played a significant role in the rise of decentralized exchanges (DEXs).
What is PSM?
The Anchor Stabilization Module, commonly known as PSM, is a module within the MakerDAO protocol. It is designed to facilitate the trading of Dai with USDC, a stablecoin backed by US dollars in a 1:1 ratio, allowing for arbitrage traders to keep the value of Dai near its 1 USD peg. In simple terms, the PSM allows users to trade Dai for USDC, which increases the liquidity of Dai, making it easier to obtain and trade.
Why is standardization of PSM parameters important?
The PSM is an important part of the MakerDAO protocol as it plays a critical role in maintaining the stability of Dai. It enables Dai to be traded for USDC when the value of Dai is above $1 to prevent it from rising too much above that peg. Conversely, it allows Dai to be traded for USDC when the value of Dai is below $1 to prevent it from falling too much and provide support for its price.
The standardization of PSM parameters is important because the parameters used to determine the supply and demand of Dai and USDC in the PSM can have a significant impact on the price of Dai. Standardizing these parameters will ensure that the proper amount of Dai and USDC are available in the PSM to maintain the stability of Dai and prevent it from deviating too far from its peg.
The two options mentioned in the poll
The MakerDAO community has proposed two options for standardizing the PSM parameters:
Option 1: Diversify the stable currency reserves of the PSM to diversify risks and improve the flexibility of stable currency liquidity.
Option 2: Maintain the USDC as the primary reserve.
Option 1 is suggested to improve flexibility in trading between Dai and USDC. By diversifying the stable currency reserves of the PSM, there will be a wider variety of stablecoins that could be traded with Dai, allowing for greater efficiency in trading.
Option 2 suggests holding USDC as the primary reserve, which is the current situation. It is being suggested for its stability and the fact that it is a widely accepted stablecoin.
Voting results so far
According to the poll, the voting approval rate for option 2, to maintain USDC as the primary reserve for PSM, is currently at 60.24%. The voting will end at 00:00 on March 23rd. It will be interesting to see the final results and to see what direction the MakerDAO community decides to take.
Conclusion
MakerDAO is an important player in the DeFi ecosystem, and the standardization of PSM parameters is essential for maintaining the stability of Dai. The MakerDAO community’s poll regarding standardization of PSM parameters has taken an important step towards improving the flexibility of Dai and USDC trading.
FAQs
Q: What is Dai?
A: Dai is a stablecoin that is pegged to the US dollar and is the stablecoin issued by MakerDAO.
Q: What is USDC?
A: USDC is a stablecoin that is also pegged to the US dollar and is backed by US dollars in a 1:1 ratio.
Q: What is PSM?
A: PSM is the Anchor Stabilization Module, a module within the MakerDAO protocol designed to facilitate the trading of Dai with USDC.
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