as things stand stables can cover a majority of outstanding user owned FEI, and undoubtably a considerable percent of the user owned FEI is borrowed from various platforms. The borrowed positions are most likely to be unwound in case of a bear market.
With currently PCV holding, it would take something like an ETH plunge to ~$750 to cause real collateralization problems. Merely assuming Brownian price movements, it is very unlikely such an development materializes quickly.
Also DAI itself is mostly collateralized by ETH, if a plunge to ~$750 is to materialize, it is more likely that DAI’s own peg would fail before FEI’s peg can fail. There is also the consideration of creating systemic defi risk of stablecoins all cross-holding each other’s tokens. This is somewhat analogous to Japanese banks depositing their assets into each other in the early 1990s, before the bubble burst caused technical insolvency to proliferate.
On a third note, which I understand is very unflattering to all of us and the protocol; Fei’s incredible war chest and policy runway is mostly a function of ETH hodling, there is no evidence to suggest any single trader engaging in “timing of the markets” have beaten ETH hodling in ETH’s entire history. 60% of professional fund mangers making millions fail to beat the SP500, and the statistic for retail traders is more dire, along the lines of 90%.
As I have opposed every single measure of PCV diversification into stablecoins in the past, the core tenants of my belief has not changed, and I am steadfast in opposing any future measures of exchanging more PCV assets, especially for other Stablecoins similarly backed by ETH.