The MakerDAO community, the largest decentralised finance (DeFi) protocol, has approved a proposal that will see the crypto protocol custody as much as $1.6 billion USD Coin (USDC) worth roughly Rs. 13,156 crore with cryptocurrency exchange Coinbase. The USDC will be held via Coinbase’s institutional custody platform Coinbase Prime, and offer a yield of 1.5 percent, with custodied funds accessible round-the-clock to the DAO Peg Stability Module as it looks to help push the overall growth of the stablecoin and DeFi ecosystems.
According to MakerDAO, 75 percent of the community voted to ratify the Coinbase Institutional Rewards proposal, paving the way for the move.
Coinbase believes the proposal will also help grow the USDC under custody, expanding the stablecoin’s institutional reach and rewards. The crypto exchange, among the consortium that backed the launch of USDC and works towards its growth, believes the USD-pegged stablecoin is on track to becoming a major player in a new financial paradigm.
As per the proposal, MakerDAO won’t be paying any custody fee to Coinbase. Additionally, the community will need to vote on whether they are willing to keep their funds custodied with Coinbase after the set trial period.
Jennifer Senhaji, the Head of Growth and Business Development at MakerDAO, said in a statement, “This proposed collaboration with Coinbase follows an approved signal of intent by the MakerDAO community to increasingly invest Maker’s collateral into short-term bonds. It was agreed that any collateral deployed should meet the criteria of offering safety, cost structure, and flexibility. Coinbase is uniquely situated to offer a USDC Rewards Program that fulfils these criteria.”
MakerDAO is one of the first and largest decentralised lending protocols, often tagged as the central bank of crypto. It also issues the $6 billion (roughly worth Rs. 49,326 crore) stablecoin DAI, whose value is backed by some $8 billion (roughly worth Rs. 65,702 crore) assets in its reserve. The protocol is governed by a decentralised autonomous organization (DAO), where contributors manage the platform and discuss decision-making proposals in a forum, and owners of the platform’s governance token, maker (MKR), vote to approve or reject each proposal.