MakerDAO (MKR), the decentralized group that manages the stablecoin DAI, will transfer $1.6bn of its USD Coin (USDC) reserves to Coinbase to earn a yield of up to 1.5%.
The proposal to have Coinbase custody a part of the MakerDAO treasury was handed by the MakerDAO neighborhood on Monday, with 75% of the votes being in favor of the transfer. The $1.6bn represents one-third of MakerDAO’s treasury – the reserve that permits customers to deposit collateral in change for being issued the DAI stablecoin.
In the proposal, generally known as MIP81, Coinbase is described as “a longstanding partner” of Maker, and “an established, reputable, and regulated company.”
“This MIP outlines a clear path to providing up to 1.5% APY on USDC in the form of USDC Rewards and optimizing liquidity at zero cost to, and industry-leading security for, Maker,” the proposal stated.
According to the proposal, Maker won’t pay any custody charges to Coinbase, and the neighborhood will want to vote once more for an extension if funds are to be held in Coinbase’s custody after a trial interval ends on the finish of 2022.
The subsequent step for now will probably be for MakerDAO to arrange a brand new “legal entity” that may formally deposit cash into Coinbase’s Institutional Rewards program on behalf of the DAO, a tweet from MakerDAO defined.
For Coinbase, the passing of the proposal marks a serious achievement, with the quantity of capital it custodies for shoppers now nearly doubling from the present $1.7bn, per a weblog put up from the corporate.
“By holding USDC in custody in exchange for monthly rewards, MakerDAO will receive additional revenue to the treasury, providing flexibility that it could use to fund operations or provide incentives to attract new users,” the change additional commented within the weblog put up.
The information that MakerDAO will now earn further yield on its reserves didn’t seem to make a serious impression on the worth of its governance token MKR, which traded down together with the broader market on Monday. As of Tuesday night time UTC time, nonetheless, the token had recovered a few of its losses from yesterday, buying and selling up 2.2% for the previous 24 hours to slightly below $950.
MKR value final 30 days. Source: CoinGecko
USDC is the second-largest stablecoin within the crypto market with a market capitalization of $43.5bn. By comparability, the preferred stablecoin, Tether (USDT), has a market capitalization of almost $68bn, per information from CoinGecko.
Compiled by Coinbold