> ## Documentation Index
> Fetch the complete documentation index at: https://pegana.xyz/docs/llms.txt
> Use this file to discover all available pages before exploring further.

# DAI took the same wave as USDC — and proved CDP-collateral isn't bullet-proof

> MakerDAO's DAI traded below $0.89 alongside USDC during the SVB weekend. Half its backing was USDC; when USDC bled, DAI bled.

<Info>
  **Asset**: DAI · **Class**: CDP · **Date**: 2023-03-11
  **Worst spread**: −1100 bps · **Duration**: ≈ 56 h outside `PEGGED`
  **Detected live**: No (pre-Pegana retrospective)
</Info>

## Background

By Q1 2023 the Maker PSM (Peg Stability Module) had absorbed enough USDC to push
USDC's share of DAI's reserves to about 52%. The PSM converts 1 USDC → 1 DAI 1:1,
which is great for the peg until the asset on the other side of the conversion is
the one breaking.

## Trigger

Circle's SVB disclosure on March 10 sent USDC into a freefall. DAI followed within
the hour — the market priced DAI as if it were a 50%-USDC-backed claim, because that's
what it was. Worst prints landed near \$0.885 on Sunday March 12 across Curve and
several CEX venues.

## Cascade

* MakerDAO emergency-paused USDC-side PSM swaps to stop USDC from being dumped into
  the peg module at par.
* DAI lending protocols (Aave, Compound) saw collateral re-valued; some borrowers
  were liquidated against intra-incident lows.
* Curve's 3pool absorbed enormous imbalance flows — LPs printed losses on both legs
  (USDC down, DAI down).
* Tether and other USDC-light stables briefly traded above \$1 as a flight-to-quality bid.

## Recovery

Once the FDIC/Treasury backstop landed on Sunday evening and USDC began re-pegging
Monday morning, DAI converged within hours. The full episode lasted \~60 hours
start-to-finish.

## What Pegana would have shown

* **Friday \~22:30 UTC** — USDC enters `DRIFT`. **DAI follows within minutes** — its
  intrinsic-equivalent (the reserve composition) was visibly impaired. **`PEGGED →
  DRIFT`** on DAI fires shortly after USDC's.
* **Saturday \~04:00 UTC** — Spread crosses 100 bps on DAI. **`DRIFT → DEPEG`**.
* **Sunday \~04:00 UTC** — Thin Sunday DEX prints push DAI below \$0.89. **`DEPEG →
  CRITICAL`** (or stays in `DEPEG` depending on per-asset critical threshold).
* **Monday \~15:00 UTC** — Sustained recovery. Hysteresis exit cascade.
  **`CRITICAL → DEPEG → DRIFT → PEGGED`** over \~3 hours.

The DAI alert would have been correlated with USDC's by timing alone — a useful
signal that the contagion was crossing assets.

## Lesson

CDP-style stables built on top of fiat-stable collateral inherit that collateral's
tail risk. The peg holds only as well as what backs it. Pegana tracks Hylo's
collateral ratio on-chain for exactly this reason — a SOL-collateralized CDP doesn't
share USDC's fiat-bank tail, but it has its own SOL-volatility tail you need a
number for. See [Hylo CDP CR signal](/docs/concepts/hylo-cdp-cr-signal).

## Sources

* [MakerDAO emergency PSM proposal (March 2023)](https://forum.makerdao.com)
* [Curve 3pool depth during the incident](https://curve.fi/3pool)
* [DefiLlama — DAI reserves composition](https://defillama.com/stablecoin/dai)