<\/p>\n
Nostra Finance is pausing new borrowing and lending of DAI, while a similar proposal has been floated in Aave\u2019s governance forum.<\/p>\n
DeFi projects are up in arms with MakerDAO after the veteran DeFi lending protocol added<\/a> Ethena\u2019s USDe \u2018synthetic dollar\u2019 to its collateral basket as part of its Endgame<\/a> overhaul.<\/p>\n On March 29, MakerDAO approved an executive proposal setting a debt ceiling of $100 million DAI for the Spark DAI Morpho Vault, which lets investors borrow DAI against USDe and sUSDe (staked USDe).<\/p>\n Adding both assets, the first of which currently holds fifth place<\/a> for stablecoins by market cap \u2013 sitting firmly above $1.6 billion \u2013 has caused a stir in the DeFi lending sector.<\/p>\n <\/p>\n <\/a><\/p>\n \u201cMakerDAO has become unpredictable in terms of risk management,\u201d said Marc Zeller, founder of the Aave Chan Initiative. Zeller has authored a proposal<\/a> in Aave\u2019s governance forum to revoke the collateral status of DAI on Aave.<\/p>\n \u201cThis will mitigate potential contagion risks for the Aave users,\u201d posted<\/a> Zeller today on X, adding that \u201cDAI remains an onboarded asset that users are free to borrow. “Endgame” it is,\u201d he wrote.<\/p>\n He told The Defiant that de-risking is better because MakerDAO is \u201csimply not the conservative protocol we used to love.\u201d<\/p>\n His remarks echoed those of David Garai, founder of Nostra Finance, a permissionless, non-custodial lending and borrowing protocol on Starknet.<\/p>\n \u201cWe are basically disabling DAI as a collateral asset,\u201d Garai told The Defiant. He explained that his team has observed that the collateral backing USDe and now DAI is being held at custodians, who deposit those assets to centralized exchanges.<\/p>\n \u201cWe aren’t confident that in a bear market, these centralized exchanges will remain solvent, and in case of insolvency, the custodians will make up for any shortfall,\u201d he concluded, pointing out that existing lenders and borrowers will not be affected by the change.<\/p>\n Ethena Labs, the startup behind USDe and sUSDe, has drawn comparisons<\/a> to Terra and its ill-fated UST stablecoin with its double-digit yield when it launched on Feb. 21.<\/p>\n However, its architecture has been widely celebrated by crypto heavyweights.<\/p>\n The \u201csynthetic dollar\u201d is collateralized with crypto assets \u2013 such asstaked Ethereum<\/a> (stETH) \u2013 that are hedged with corresponding short futures positions on centralized exchanges. Ethena Labs is able to offer its high yield \u2013 currently 35% APY on sUSDe \u2013 thanks to a blend of native staking returns and average funding fees paid to shorts.<\/p>\n Funding fees are the mechanism through which exchanges get perpetual futures to trade in line with spot prices. Positive funding means that traders holding long positions pay a fee to those holding short positions, like Ethena.<\/p>\n Pushing back against today\u2019s outcry is MonetSupply, the pseudonymous co-founder of Block Analitica, a risk intelligence platform for DeFi.<\/p>\nControversial Architecture<\/h2>\n