$1.02 0%
DAI · 1w

What happens if DAI loses it's peg and goes to $2 for example?

So, please bare with me and imagine this scenario. At 15th Jan, NYAG decided Tether is fraud and/or Tether is unbacked throwing the full power of the US government against it. Tether obviously loses it's peg and starts racing to $0, that wouldn't be huge deal but it's in every DEX AMM pool with other stables So let's make this simple example in AMM DAI/USDT pool, USDT goes to 0 and DAI goes to $2 ​ Suddenly people that have borrowed $300 worth of DAI against $1000 worth of ETH (at relatively safe margin level of 300%+) Owe $600 instead of $300. At the same time other with riskier margin levels get liquadated and ETH price dumps as well, causing even the safe guy above being under collaterized with $600 worth of DAI against $100 worth of ETH (if ETH drops 90%) ​ Wouldn't that crash the whole system? And not just makerdao of course but pretty much everything? I realize this is unconfirmed black swan FUD at this point, but black swans do happen from time to time and I just woud like to know if the above scenario is ralistic if that does happen, your thoughts?
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