Global cryptocurrency exchange Coinbase releases a proposal looking to transfer MakerDAO’s $1.6 billion in return for increasing the platform’s revenue by approximately $24 million.
Coinbase is proposing that MakerDAO deposit the $1.6 billion, or 33 percent of the “Peg Stability Module (PSM)”, into its Prime Custody Account to earn a 1.5% annual yield on savings.
MakerDAO enables interest to be earned on the DAI that depositors keep in Maker’s bank. Instead of borrowing DAI, its PSM enables users to swap a specific type of collateral directly for DAI at a fixed rate.
To see if Maker’s present PSM allocation is “highly underinvested”, investments may be made. If this is accurate, it would make DAI less desirable as a stablecoin.
If Coinbase’s proposal is approved, Maker won’t be required to pay any fees when making a PSM deposit to Coinbase, allowing Maker to mint, burn, withdraw, and settle all of the USDC that it has been allotted for free through Coinbase Prime.
This proposal is a calculated strategic move that will produce income from idle assets on MakerDAO’s balance sheet.
The majority of responses on the plan have been favorable and mention how low-risk the investment is.
The 1.5% APY, according to some members, is somewhat low. They noted that it should “be a variable rate to match the market, with the potential to increase as DeFi starts to see higher APR on stables again post crypto winter.”
While some suggested the proposal might add a new layer of regulatory attack on the protocol and damage Maker’s decentralization.
The Growth Core Unit, Collateral Engineering Services Unit, and Strategic Finance Core Unit are just a few of the MakerDAO core units that have endorsed the idea.
Just last month, MakerDAO suggested a free-floating DAI to limit the attack surface. Co-founder of MakerDAO, Rune Christensen asked the MakerDAO community to emphasize more on free-floating currency backed by other decentralized entities “that could fall in value”.
