This Monday, Coinbase announced that MakerDAO approved a proposition to transfer up to $1.6 billion in USDC to its custody program. MakerDAO holds a majority of its collateral in USDC and will be receiving a 1.5% reward on funds in the custody program.
MakerDAO Approves a Proposal to Transfer USDC to Coinbase’s Custody Reward Program
The proposal to place some of Maker’s USDC into the Coinbase custody program can be traced back to early September. The initial idea was to place around 33% of the DAO’s Peg Stability Module (PSM) to equaling around $500 million into the program. This move was intended as a way to diversify Maker’s revenue sources since Coinbase is offering custody rewards of 1.5%
Coinbase was chosen both due to being a long-standing partner of MakerDAO, and due to it being the largest holder of USDC. The original proposal went on to add that Coinbase was chosen due to being “an established, reputable, and regulated company,” and added that it was evaluated based on “safety, cost structure, and flexibility.”
Today, Coinbase stated that all the funds Maker transfers to its custody would be accessible to the PSM “24/7/365,” and would be kept secure and safe and secure while earning the 1.5% reward. The company also lauded the move as a way to further strengthen the overall stablecoin ecosystem.
In addition to the tangible benefits for the MakerDAO community, this initiative demonstrates our commitment towards the growth of the overall stablecoin ecosystem and empowering the DeFi community and its users. As co-founders of the Centre Consortium, we powered the launch of USDC and remain committed to supporting USDC initiatives as a core bridge between crypto and fiat.
MakerDAO is Also Diversifying Outside of DeFi
While the proposal to transfer MakerDAO’s USDC to Coinbase has proved popular enough to pass, it has been facing some opposition since the very beginning. Most of this opposition has been centered around a desire to depeg from USD in the aftermath of OFAC blacklisting Tornado Cash.
One of the early criticism of the proposal warned that moving the DAO’s USDC to Coinbase would “add yet another regulatory attack vector.” The warning added that such a move would enable regulators to target DAI directly if they chose to do so.
One of the effects recent regulatory efforts aimed at crypto—as well as the protracted “crypto winter”—had on the DAO is the decision to diversify outside of DeFi. Maker recently voted in favor of expanding into TradFi by investing $500 million into US and UK bonds.
This article originally appeared on The Tokenist
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