On Oct. 24, Coinbase announced that MakerDAO governance had approved their proposal to custody up to $1.6 billion USDC with Coinbase Prime.
This means that Coinbase has broadened its USDC rewards program to an institutional client for the first time, it added.
MakerDAO community approves our proposal to custody up to $1.6B in USDC with Coinbase Prime. Marks the first time we’ll offer USDC rewards to institutions. Excited for what this means for USDC, @MakerDAO, and the stablecoin ecosystem as a whole. https://t.co/jOrmEvYg80
— Coinbase Institutional (@CoinbaseInsto) October 24, 2022
MakerDAO will therefore hold the funds with Coinbase Prime, the firm’s institutional broker, while earning 1.5% on them.
The proposal was approved with 75% of the votes, or 109,944 MKR tokens, on Oct. 24.
Mitigating DAI Decentralization?
Coinbase is optimistic and confident that stablecoins will be an integral part of the future of finance.
Its USD Coin (USDC) has increased its market share at the expense of industry leader Tether (USDT) over the past couple of years.
MakerDAO is now the largest holder of USDC.
Coinbase Institutional Rewards (MIP81) has been approved by Maker Governance through a Ratification Poll.
This outcome enables Core Units to initiate the onboarding of 33% of the PSM’s USDC to @Coinbase‘s Institutional Rewards program.
— Maker (@MakerDAO) October 24, 2022
Commenting on the development, Jennifer Senhaji, growth and business development at MakerDAO, said the additional monthly revenue generated through this deal
“enables Maker to further advance its overarching mission to create a global, trustless financial future built on decentralized rails.”
On second thought, the move eats some of the decentralized properties of Maker’s stablecoin DAI as it is now largely collateralized by a centralized stablecoin.
USDC constitutes a third of the treasury backing the Peg Stability Module that allows users to deposit collateral to mint DAI.
It is part of phase one of Maker’s “Endgame Plan” to increase its collateral into real-world assets and short-term bonds.
The long-term goal of the plan is to make DAI a free-floating asset that is not pegged to the dollar, cryptopotato revealed.
However, in the next three years, Maker will increase momentum on real-world assets in order to accumulate Ethereum and increase the ratio of decentralized collateral.