MakerDao’s stablecoin, Dai, which is collateralized with cryptocurrency [Ethereum by default], is collapsing, according to Preston Byrne. In his tweet thread, Byrne described that the peg for Dai has been weakening over the years and his prediction of it being “a bunch of twaddle” had turned out to be true.
Since Dai is massively overcollateralized with Ethereum, in one his reviews of Dai project, Preston Byrne stated:
“… in the event of an Ethereum black swan event the value of the underlying collateral, and therefore the value of the stablecoin, will also be wiped out.”
Byrne is known to be a skeptic of stablecoins and believes that all stablecoins are doomed to fail. In a recent update on Dai, Byrne tweeted:
“The nice thing about predicting the demise of a stablecoin is that, in any free (i.e. unmanipulated) market, you are 100% guaranteed to be right. You just need to wait for your day to arrive”
Looking at the current state of Dai, it was priced at $0.9842 and was up by 0.73% in the last hour; moreover, the price of Dai fell off the peg and dipped to $0.9335 on July 15. Dai was being traded under a dollar in all the exchanges for most of the pairs, as seen on CoinMarketCap.Other Stablecoins
Other stablecoins like Tether, TrueUSD, USDC, have also fluctuated in the past, where the peg was off the standard price, however, they have bounced back to the standard level and were all trading at $1 with a strong peg to the U.S.Dollar. Similar to these other stablecoins, Dai has also previously gone off rails but has managed to bounce back up.
Looking at the last 48 hours, Dai has managed to hit the $1 point twice, which goes to show that the stablecoin is not so “stable” after all. Unlike the previously mentioned stablecoins, Dai is unable to hold its peg.
Byrne used the data from CoinMarketCap and FatBTC exchange in his review and the tweet storm, which caused a lot of Dai supporters to bicker about how the data obtained was wrong.
“literally am just *reporting what a third party data feed says* about the average, volume-weighted price of the coin across 98 markets and they lose their minds. How heavy do your bags have to be to ignore raw data?”
So, is Dai really breathing its last breath? Is Dai seeing light at the end of the tunnel? How heavy are your Dai bags?