MakerDAO Faces High Volatility Crisis after OasisDEX Closes for Upgrades
MakerDAO, the ecosystem allowing Ethereum (ETH) collaterals to create the DAI stablecoin, is facing a liquidity crisis as the community seeks trading venues.
Maker (MKR), an asset used to generate the DAI stablecoin, saw increased volatility in the past day due to the OasisDEX closing for a makeover.
Oasis decided to close about a month ago and shut down its service on January 31. The project will relaunch after multi-collateral Maker becomes available and will keep adding liquidity. In the meantime, MKR owners will have to do with smaller exchanges.
Even though MKR will be facing lower liquidity only for a limited period, the uncertainty triggered nervousness on the markets and increased price volatility. Trading moved to smaller exchanges, and new DEX Eth2Dai is just picking up with order books. Currently, the Bitinka exchange is the most active one, leading to increased price action. Some of the trades are happening on mirrored OasisDEX sites, but volumes remain slim.
MKR has been volatile in the past few days, moving from lows of around $370 over the weekend and back up to the $440 level. It traded at $424.29 as of 8:00 UTC on Tuesday, with price swings of as much as 10% within one hour. As MKR owners seek ways to ensure liquidity, the next few days may see continued price instability. The DAI stablecoin is close to its peg at $0.99, relatively unaffected by the movements of MKR.
Bitinka prices are also anomalous, reaching $508 and above on the MKR/USD markets. On other exchanges, including OasisDEX residual trades, the price is closer to $380. With thin order books, the price may move even more erratically.
In the future, the MakerDAO project expects to allow a multi-collateral ecosystem, using numerous coins and tokens to generate DAI stablecoins. In theory, it would also be possible to use illiquid tokens or even security tokens as collateral. For now, MKR remains highly risky, and price movements do not reflect organic growth.