Coinbase is suggestion If passed, MakerDAO (MKR) could earn up to $24 million annually.
According to the proposal, MakerDAO will transfer 33% of the $1.6 billion Peg Stability Module (PSM) (approximately $528 million) to Coinbase Prime custody accounts for an annual savings yield of 1.5%.
PSM is a mechanism designed to keep a Maker’s DAI at $1. It was launched when the stablecoin crossed $1 during the 2020 crypto market crash.
Since then, PSM has effectively helped DAI maintain its peg.
Recently, key members of the DAO have expressed concern that PSM is under-invested.
One of our members argued that PSM’s underinvestment would reduce:
“Protocol risk-taking ability and attractiveness as a stablecoin”
Coinbase’s proposal is therefore designed to provide a safe investment vehicle for Maker’s PSM. According to the proposal, DeFi protocols will not have to pay storage fees to allocate PSMs.
Additionally, Maker Governance, like Coinbase Prime, can issue, burn, withdraw, and settle USDC in less than 6 minutes.
“Coinbase is uniquely positioned to provide MakerDAO with a USDC rewards program that meets this criteria. Specifically, Coinbase is an established, reputable, and regulated company.”
The proposal also explained how the rewards would be paid and the payout schedule.
DAO members agree with the idea
Most of the comments on this proposal were positive, stating that the risk of investment is limited.
However, some members Said 1.5% APY is a little low. Instead, “it should be a variable rate to match the market. After the crypto winter, if DeFi starts seeing stable APRs again, it could increase.”
Meanwhile, some members claimed This proposal could impact Maker decentralization and add another layer of regulatory attack to the protocol.
Members of the MakerDAO core units, including the Growth Core Unit, Collateral Engineering Services Unit, and Strategic Finance Core Unit, have also expressed support for the proposal.
Maker’s Growth core unit member Jenn Said This is not the first partnership between MakerDAO and Coinbase. The two entities have a long relationship, and this proposal is just another milestone in that relationship.
