Milenius: Maker mints MKR to cover bad debt during collateral crashes
Andy Milenius · a16z Podcast | All About Stablecoins · Jan 2, 2019 · at 27:01
Andy Milenius, CTO of Maker, explains the recapitalization mechanism that dilutes MKR holders if governance approves collateral that subsequently fails.
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“In the case where one of the collaterals that they accept to be issued against, if they ever make a mistake, and that collateral loses all of its value overnight, then all of the die that was issued against it needs value to be backing it. And so what happens is MKR is minted and sold off in the marketplace to cover that debt.”
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