A raft of liquidations forced MakerDAO to spend half of the $500 million it holds in a Coinbase Custody account to protect the peg for its DAI stablecoin.

DAI’s USDC reserves — which needed to be above at least $200 million to be considered safe — nearly sank below $60 million Tuesday morning before the manager of Maker’s Coinbase trust transferred $250 million into DAI’s so-called peg stability module (PSM). 

The liquidity fire drill highlighted the permissioned process by which the largest decentralized stablecoin refills its reserves.

The PSM is a collateral pool that lets users mint USDC for DAI 1:1 and arbitrage DAI back to its dollar peg. If the PSM’s reserves empty…

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