According to Preston Byrne MakerDao’s stablecoin that is collateralized with Ethereum cryptocurrency, is about to collapse. In a series of tweets, Byrne explained his reasons saying that the peg for Dai has been on a downward trend for the last couple of months and his allegations that the stablecoin was ‘a bunch of twaddle’ was finally coming to be.
Byrne has been critical of Dai due to its massive overcollateralization with ETH and in one of his insights of the Dai project, he stated the following:
“… 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.”
The independent crypto and blockchain consultant and analyst has been a strong critic of stablecoins and has not shied away from his assertion that all stablecoins are likely to fall in the near future. Byrne, in his updates reminded his audience that he had foreseen the demise of Dai, saying:
“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.”
A quick review of Dai’s current state shows that it was valued at $ $0.9842 and in the last one hour its value had increased by 0.73%. In addition, on July 15, Dai was trading at $0.9335 which is below its peg. In the recent past, Dai has been trading below one dollar in almost all exchanges for majority of the pairs. This is as indicated below as per the data from CoinMarketCap.
Other Stablecoins Have Suffered Similar Issues
Just like Dai, other stablecoins in the market such as Tether, TrueUSD, and USDC have also witnessed a decrease in their value below the set standard price. However, it is important to note that they have been able to go back to their standard prices and by the time of publishing they were all trading at $1 having a formidable peg to the US dollar. In a similar way like other stablecoins, Dai has on several occasions fluctuated trading below the standard price but has managed to bounce back up.
In the last 48 hours, Dai has been able to reach the $1 mark on two occasions. This is a testament that the coin is not that stable after all. Compared to other stablecoins in the market, Dai has failed to hold its standard or peg price.
As expected, the tweeter storm by Byrne created a lot of friction with Dai supporters and the analyst was quick to point out that he was just using the data to come up with his conclusions.
Is Dai on its deathbed or will it rise up again? Share your thoughts with us in the comments section.