MakerDAOorganization behind Midwife stable currencyDirect Deposit Module (D3M) is set to disabled for DeFi lending platform come later today.
“Maker Governance Votes Temporarily Disabling Aave DAI Direct Deposit Module” tweeted MakerDAO. Government offerEarlier this week, the community was invited to vote on temporarily disabling D3M for Aave, in order to reduce Maker’s exposure to the crisis-ridden crypto lending platform Celsius.
The proposal was unanimously accepted by the Governance token holders community on 15 June, and is scheduled to be implemented today around 21.03 UTC.
Maker Governance has voted to temporarily disable @AaveAave DAI Direct Deposit Module (D3M).
This change is available for execution on 17 June 2022 21:03 UTC.
https://t.co/3wKQiEvcMw
— Maker (@MakerDAO) 15 June 2022
It aims to prevent further lending by Celsius using Aave’s D3M by setting the target lending rate to 0 in the smart contract responsible for D3M.
“This change is being proposed to temporarily disable Aave D3M.” Reading offer. Aave DAI Direct Deposit Module (D3M) Target Lending Rate (Bar) will be set to 0,
How Maker’s D3M Works
The Direct Deposit Module (D3M) enables the Maker ecosystem to interact with third-party lending pools (eg, Aave). D3M aims to maintain the interest rate of DAI in lending pools, especially Aave.
Aave has a total exposure of 200 million DAI (as in 1 DAI = $1 CoinMarketCap) for Maker’s D3M, of which 100 million DAI is borrowed by Celsius using stETH (representation of a ETH bet with Lido) as collateral.
Celsius withheld withdrawal and transfers to users earlier this week Growing Concern For STETH at DeFi lender’s risk. with growing uncertainty On the launch date of the upcoming Ethereum merge, stETH lost its peg against ETH – putting heavy selling pressure on stETH and risking a wave of redemptions on Celsius, which locked client funds into stETH.
If Celsius goes bankrupt and faces a margin call, it could dump its stETH – causing it to drop further below ETH. This, in turn, would make MakerDAO’s 100 million DAI loan to Celsius irrevocable.
Therefore, in order to protect its lending position and prevent further lending of DAI using stETH collateral, MakerDAO voted to temporarily halt D3M.
Following Maker, Aave is also looking to freeze stETH and use it as collateral on the platform, according to a recent offer Dubbed “Proposition 83”.
stETH has lost its peg and is currently hovering slightly lower ETH price, According to the data, stETH is currently trading around $1,025, which is a 6% difference from the price of ETH. CoinMarketCap,
the creator (MKR), the native token of the MakerDAO ecosystem, is up 3.5% over the past 24 hours and is currently changing hands for around $767 per data. CoinMarketCap,
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