The recent failure of Terra's algorithmic stablecoin UST dominated crypto discussions worldwide. While UST plummeted to ~6 cents and USDT briefly lost its peg, MakerDAO's DAI remained resilient—offering valuable insights into decentralized stablecoin durability.
Stablecoin Landscape After UST's Collapse
USDC Emerges as a Clear Winner
Circle’s USDC solidified its position as a trusted stablecoin, maintaining its dollar peg throughout the volatility. Its market cap surged from $48B on May 11 to over **$53B**—a testament to growing institutional confidence.
USDT Faces Temporary Turbulence
Tether (USDT) experienced significant stress:
- Market cap dropped from $83B to **$73.2B**
- Briefly depegged to $0.95 amid confusion with UST
- Processed $7B in redemptions within 48 hours
DAI: The Decentralized Survivor
Unlike centralized alternatives (USDT/USDC), DAI operates via smart contracts with:
- Collateral diversity: ETH, WBTC, USDC (controversially), and other cryptocurrencies
- 170% overcollateralization: $1.70 in ETH required per $1 DAI minted
- Automatic liquidations: 257 positions liquidated during recent volatility, proving system robustness
Key Advantages During Crisis
- Demand surge: Traders paid 1-2% premiums for DAI/USDC/BUSD
- No depeg events: Maintained stability despite extreme market conditions
- Trust through transparency: Real-time collateral visibility vs. opaque reserves of centralized options
FAQ: Understanding DAI's Resilience
How does DAI avoid UST's fate?
DAI combines algorithmic adjustments with real crypto collateral, eliminating the "faith-based" risks of pure algorithmic designs like UST.
Why did DAI trade at a premium?
👉 Market panic drove demand for proven stablecoins, creating temporary supply shortages.
Is USDC backing a weakness for DAI?
While controversial, USDC inclusion provides stability—MakerDAO now votes on reducing centralized collateral exposure.
Conclusion: What DAI's Survival Teaches Us
DAI’s performance validates hybrid stablecoin models that balance decentralization with collateral safeguards. As regulators scrutinize stablecoins, DAI’s transparent mechanics and crisis-tested design position it as a sustainable alternative.
👉 Explore decentralized finance opportunities with assets that prioritize transparency and resilience.