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"Dai may also be poised to become the stablecoin of choice for ETH users, for a variety of reasons. An upcoming Coinbase listing, the potential for ICOs denominated in Dai, payroll sent in Dai, and dApps like Augur using Dai, all point to the need for Dai or something similar in the future."

Dai is minted by users taking on collateralized debt positions, where collateral is deposited in an Ethereum smart-contract, with a percentage of the asset's value being paid out in Dai. The collateral then gets released once the tokens are repaid, and the Dai are destroyed. Loans that can't be supported by their collateral are placed into liquidation proceedings, in which the collateral is auctioned for Dai to repay the debt. But the price drop allowed bidders to win liquidation auctions for 0 DAI - further worsening Maker's crisis.

Launched in December 2017 as an ERC-20 token, MakerDAO is pegged 1:1 with the United States dollar, with its peg being maintained via over-collateralization with ether (ETH). In other words, users receive the equivalent of $1 in DAI by depositing more than $1 in ETH, and they can later reclaim their collateral by repaying the DAI they've received plus a "stability fee" in MKR, MakerDAO's other (nonstablecoin) token. By charging users this additional fee, the MakerDAO system theoretically prevents the value of DAI from dropping below $1, since the fee makes it expensive to mint more DAI tokens.

Paxos Trust Company has completed a same-day settlement of US-listed equity trades in partnership with Instinet and Credit Suisse on its Paxos Settlement Service permissioned blockchain solution. Paxos said the project demonstrated its ability to enable same-day settlement for trades conducted throughout the day. In the current system, settlement can only occur the same day if trades are completed before 11 AM ET and therefore is rarely utilized. The platform is said to be interoperable with the legacy clearing system and can facilitate settlement on any time cycle.

The U.S. Financial Crimes Enforcement Network (FinCEN) is extending further the comment period for its recent proposed rulemaking regarding certain crypto-asset transactions. The proposed rule would impose new know-your-customer requirements on crypto-asset transfers to personal ("unhosted") wallets. Users would have to provide detailed personal information for transactions greater than $3,000, and exchanges would be required to report either individual or groups of transactions that add up to more than $10,000 during a day to FinCEN. The original comment period was only 15 days, most of which were holidays, and then on January 14, it gave stakeholders now have an extra 45 days to comment on the first ("$3,000") rule proposal, and 15 days on the second ($10,000) one. Now the deadline has been extended to 60 days from when the January 26 extension notice is published in the Federal Register.

Since COVID-19 smashed into markets on March 12 the price of Dai skyrocketed as high as $1.50. It has since retreated to a range of $1.01 - $1.03, but it has now spent a full month above its $1 peg - and shows no signs of returning. A negative stability fee would encourage more people to become indebted to the Dai system. This would increase the supply of Dai, and in doing so reduce upwards pressure on the peg.

"In this paper, we study the mechanisms that govern price stability of MakerDAO's DAI token, the first decentralized stablecoin. DAI works through a set of autonomous smart contracts, in which users deposit cryptocurrency collateral, typically Ethereum, and borrow a fraction of their positions as DAI tokens. Using data on the universe of collateralized debt positions, we show that DAI price covaries negatively with returns to risky collateral. The peg-price volatility is related to collateral risk, while the stability rate has little ability to stabilize the coin. The introduction of safe collateral types has led to an increase in peg stability."

"MakerDAO token holders have again voted to increase fees charged to those taking out programmatic loans on the blockchain through its U.S. dollar-backed ethereum stablecoin DAI. The fourth and largest fee hike to the DAI "Stability Fee," users who take out loans with MakerDAO to generate new DAI will soon be required to pay a 7.5 percent fee when closing out the loan."

The US Securities and Exchange Commission (SEC) now has until April 29, 2021 to deliver an initial decision on the VanEck Bitcoin (BTC) exchange-traded fund filing (45 days after the March 15 submission's official publication on the SEC website on March 15). The SEC has to approve, decline or extend (up to 249 days) the review period for the Bitcoin ETF filing within that 45-day window, and the public also has a three-week period to submit comments on the SEC website. https://www.sec.gov/rules/sro/cboebzx/2021/34-91326.pdf

In response to a deluge of comments, the U.S. Financial Crimes Enforcement Network (FinCEN) is reopening the comment period for its recent proposed rulemaking regarding certain crypto-asset transactions. The proposed rule would impose new know-your-customer requirements on crypto-asset transfers to personal ("unhosted") wallets. Users would have to provide detailed personal information for transactions greater than $3,000, and exchanges would be required to report either individual or groups of transactions that add up to more than $10,000 during a day to FinCEN. The original comment period was only 15 days, most of which were holidays. Stakeholders now have an extra 45 days to comment on the first ("$3,000") rule proposal, and 15 days on the second ($10,000) one.

"The release of Multi-Collateral Dai (MCD) is only 10 days away and will mark a huge milestone reached for the MakerDAO project. MCD will introduce exciting new features to the Maker Protocol, including the much-anticipated Dai Savings Rate (DSR) and, of course, additional collateral asset types. "

After nearly two weeks of continuous voting, MakerDAO token holders have officially activated a decrease to DAI stablecoin fees. DAI is an ethereum-based token which presently maintains a soft peg to the U.S. dollar.

Tether (USDT), with a market cap surpassing $16 billion, continues to hold the lion's share of stablecoins in circulation, but two smaller rivals are trouncing it in crypto's hottest market this year, decentralized finance (DeFi). Measured by the total value locked in six of the most popular DeFi protocols - Compound, Maker, Uniswap, Curve, Aave and Balancer - USD coin (USDC) is in the lead among stablecoins followed by dai (DAI), the native stablecoin to MakerDAO. USDC and DAI have market caps of $2.74 billion and $608 million, respectively.

The European Central Bank (ECB) published a paper about the Eurosystem's commitment to the principle that every individual in the euro area should be able to decide how to make day-to-day payments, regardless of their individual payment preference, geographical location or technological savviness. On the basis of the ECB's most recent data, despite the gradual decline in cash transactions, cash is the most popular payment instrument among euro area citizens for day-to-day transactions at the point of sale or person-to-person payments. In addition, cash is used for savings and liquidity, especially in times of crisis or uncertainty.

"To fully qualify as a lower risk stablecoin, the price cannot go below 99.9 cents on more than three days in 12 months. A stablecoin outright fails the test if it drops below 99.8 cents more than ten times during a year. We assume this is at any point during the day, but that's unclear. Using data from Messari, USDC, considered higher quality than Tether, would have failed both tests intraday every day during the past month. Tether managed to pass on six out of 30 days. However, at 'close' USDC would have failed the first test just four times compared to 16 times for Tether. But extrapolating to a year, that's enough for both to be classed as a pure cryptocurrencies."

The Reserve Bank of India (RBI) wholesale central bank digital currency (CBDC) pilot started in November 2022 is seen as losing steam as the number of trades and settlement volumes has constantly fallen over the last few months, according to data compiled by Moneycontrol. The settlement of trades in government securities using digital rupees was in the range of Rs 5 billion to 6 billion a day in the first month of launch, which in the later months fell to just Rs 100 million to 600 million a day. The number of trades has fallen from 45 to 60 a day in the first month to just two to six a day in the later months.

The MakerDAO (MKR) community has locked in a March 19 auction to cover a multi-million dollar hole in DAI collateral after the sudden Ethereum (ETH) price crash on March 12. The system will auction newly minted MKR in exchange for DAI. The proceeds from the sale will be used to recapitalize the system and compensate the losses suffered by the borrowers who saw their Ethereum collateral auctioned off for zero DAI. As the stablecoin powers many decentralized finance applications, the stability of Maker is paramount for the entire ecosystem.

MakerDAO is a protocol behind the stable coin DAI - a cryptocurrency that maintains a 1:1 peg to the USD. Think of 1 DAI as $1. What makes it unique is each DAI is backed by Ether instead of a 3rd party claiming to have the required collateral. Since Ether is volatile this poses some interesting challenges to maintain the peg.

MakerDAO (MKR) set interest rates on most assets, with the notable exclusion of Ether (ETH), back above 0%. Lowering interest rates is generally seen as a way of stimulating DAI creation, which is supposed to lower its price to its intended $1 peg, but DAI is trading at $1.03, significantly above its intended price. Maker has yet to find a satisfactory mechanism to entice arbitrageurs to bring the price down to $1. Several proposals based on strong-handed market interventions are being discussed, while external observers often bring up the idea of setting negative interest rates. The Maker community appears to be unwilling to cross that line for now, however.

Since Black Thursday, ETH is still performing well and organic demand for leverage has only increased. However, DAI selling from leverage seekers could not offset the yield farming craze and on average DAI has traded at around $1.02. Potentially, market making activities also decreased due to lucrative opportunities from yield farming. Importantly, this all happened despite heavily increased debt ceilings, the onboarding of new collateral assets and 0% rates across the board. The issue is that all the conventional monetary tools at hand simply cannot compete with massive DAI demand from yield farmers and new price mechanics introduced by several AMMs like Curve.