Coinbase has submitted a proposal that could see MakerDAO (MKR) earn up to $24 million annually if passed.
According to the proposal, MakerDAO will transfer 33% of its $1.6 billion Peg Stability Module (PSM) — roughly $528 million — into a Coinbase Prime custody account to earn a 1.5% annual yield on savings.
PSM is a mechanism designed to help keep Maker’s DAI at $1. It was initiated during the 2020 crypto market crash when the stablecoin spiked above $1.
Since then, PSM has effectively helped DAI maintain its peg.
Recently, key members of the DAO have raised concerns that the PSM is underinvested.
One of the members argued that the PSM underinvestment reduces:
“the protocol’s ability to take risks and its attractiveness as a stablecoin.”
So, Coinbase’s proposal is designed to provide a safe investment avenue for Maker’s PSM. According to the proposal, the DeFi protocol will not have to pay a custody fee to allocate its PSM.
Additionally, Maker Governance will be able to mint, burn, withdraw, and settle USDC in less than 6 minutes, consistent with Coinbase Prime.
“Coinbase is uniquely situated to offer a USDC Rewards Program to MakerDAO that meets this evaluative criteria. Specifically, Coinbase is an established,…