MakerDAO To Convert USDC Into ETH Ahead Of Ethereum Merge, Community Reacts

Recently, Circle suspended USDC tokens belonging to 38 wallet addresses which were blacklisted by the US Treasury Department. These wallets were of tornado tornado - Investment platform Cash addresses.

Following this, MakerDAO has raised concern about the risks related to USDC. makerDAO makerDAO - Crypto / Blockchain SolutionFinancial Service Provider founder, rune christensen rune christensen   Rune Christensen is the co-founder and CEO of MakerDAO, which issues Dai, the world's first stable coin on the Ethereum blockchain. Starting around 2015, Christensen has zeroed in on laying out the vision and authoritative construction of the Maker Decentralized Autonomous Organization and the financial underpinnings of the Dai stable advanced money. He is likewise familiar with Mandarin Chinese.   Probably the most grounded current in the Ethereum space all through 2019 was the developing environment of decentralized finance applications, with MakerDAO and the Dai stable coin assuming a critical part in this change in account and engineering center. MakerDAO cooperated with different activities all through the year with an end goal to extend the accessibility and utilization of Dai. In September, MakerDAO declared a designer award and cooperation with blockchain-based independent stage Opolis to carry Dai installments to the consultant gig economy. In August, MakerDAO collaborated with London-based financial elective endeavor Monolith to carry Dai installments to its Visa check card.   At the end of the year, MakeDAO declared an offer of $27.5 million in MKR tokens to Dragonfly Capital Partners and Paradigm to carry Defi to Asian business sectors. The greatest specialized update in the MakerDAO platform was the launch of Multi-Collateral Dai in November, which will widen the collateralized resources backing Dai past Ethereum. EntrepreneurInvestorChief Executive Officer , has asked the community members, through the company’s discord channel, to be prepared for a depegging of the DAI stablecoin from the US Dollar. 

After the Office of Foreign Assets Control (OFAC) restricted residents from using Tornado Cash, Circle decided to freeze $75,000 worth of stablecoins. Following this, Rune claimed that these restrictions by OFAC are serious and MakerDAO should start preparing to depeg from USD.

Will The Entirety of USDC Be Converted Into ETH ?

It’s interesting to note that Rune plans to convert the afore-mentioned USDC into ETH. At the moment, USDC has collateral for more than 50% of MakerDAO’s DAI stablecoin. Hence, the founder appears very concerned with the dependency on single stablecoin and a centralized asset.

DAI’s market cap that stands at $7.5 billion, makes the currency one of the largest DeFi protocols by total value locked.

banteg banteg Banteg Developer/ProgrammerMarket Analyst , a core engineer at , tweeted that MakerDAO may propose converting all of its $3.5 billion USDC to ETH. As a result, more than 50% of DAI stablecoins will be secured by ETH, increasing from 7% currently.

The community is comparing this move to the Terra (LUNA) collapse and saying that this another “Terra in the making”. This is because the network had made a similar mistake of backing all its USDT tokens with bitcoin org bitcoin org - Event OrganiserTechnologyPayment solution . After USDT underwent a huge depegging, Terra was forced to liquidate all its BTC reserves.

Other individuals have spoken out as well. 

Even vitalik buterin vitalik buterin Vitalik Buterin is a well-known tech geek, influencer, and computer programmer. To promote the blockchain, he started Bitcoin Magazine and provided blockchain information for cryptocurrency investors. In 2015, he co-founded Ethereum, a blockchain platform that contributed to decentralized finance.   Full name Vitaly Dmitrievich Buterin Birth 31-01-1994, Kolomna, Russia Education University of Waterloo Wife/Partner To be updated / Not Married Famous for Ethereum, ETH, Blockchain advocate/promoter  Net Worth $1B (refer for realtime) Buterin recognized the need for decentralized finance and used smart contracts to publish the Ethereum whitepaper.  His contributions paved the way for Ethereum's transition to Proof-of-Stake, which proved to be scalable and effective. Furthermore, he introduced Ether (ETH), the blockchain platform's native coin. A Timeline of Vitalik’s Career Co-founded Bitcoin Magazine (2011) – Established one of the first crypto publications, writing extensively on Bitcoin and blockchain. Authored Ethereum Whitepaper (2013) – Proposed a blockchain with smart contract functionality for decentralized applications (dApps). Co-founded Ethereum (2015) – Launched Ethereum after a successful $18M ICO, revolutionizing the blockchain ecosystem. Developed Ethereum Virtual Machine (2015–2016) – Created the EVM, enabling developers to build and deploy smart contracts. Worked on Ethereum Scalability (2017–2021) – Contributed to Layer 2 solutions like Rollups, Plasma, and Sharding. Led Ethereum’s Transition to Proof-of-Stake (2018–2022) – Helped develop and implement Ethereum 2.0, merging the Beacon Chain in 2022. Blockchain Research & Cryptography (2016–Present) – Focused on zk-SNARKs, privacy tech, and decentralized governance models. Philanthropy & Crypto Advocacy (2017–Present) – Donated millions in crypto for pandemic relief, AI research, and financial inclusion.   Key Achievements of Ethereum's Co-founder   Year  Achievements Details 2014 Thiel Fellowship Awarded a $100,000 grant by Peter Thiel to work on Ethereum. 2018 Fortune 30 Under 30 Recognized as one of the most influential young leaders in technology. 2018 World Technology Award in IT Software Honored for contributions to blockchain and Ethereum’s development. 2021 Time 100 Most Influential People Recognized for his impact on the global crypto and blockchain ecosystem. 2022 Ethereum’s Transition to Proof-of-Stake Successfully led Ethereum’s transition from Proof-of-Work to Proof-of-Stake.   Other Useful links to connect with Vitalik Buterin   Platform Link X (formerly Twitter) https://twitter.com/VitalikButerin GitHub https://github.com/vbuterin Ethereum Official Website https://ethereum.org Vitalik’s Blog https://vitalik.ca EntrepreneurCrypto and Blockchain Expert , co-founder, is of the opinion that this would be a risky approach. Vitalik states that if Ethereum plunges in its value, even the collateral value will drop. Hence, the overall system would be affected, making it a fractional reserve.

In reply to Vitalik’s comment, Rune Chirstensen replied that they don’t have any plan to transfer all of USDC into ETH and only might transfer a few.