- MakerDAO members have approved MIP81, which will see $1.6 billion custodied with Coinbase Prime
- The pilot will see Coinbase Prime pay out 1.5% APY on the custodied USDC
- MakerDAO has been looking to ditch USDC since the Tornado Cash affair
MakerDAO has approved a deal to custody $1.6 billion with Coinbase Prime, earning the DAO up to $2 million per month interest. The issuer of the DAI stablecoin has also approved a $500 million loan to Coinbase, which will earn it in the region of 6% interest per year. The funds will be sent in USDC, which MakerDAO was looking to remove from its collateral following the Tornado Cash affair, with the amount making up one-third of the treasury backing the DAI Peg Stability Module.
MakerDAO Wanted to Ditch USDC
MakerDAO has been looking to offload its USDC ever since its issuer, Circle, froze assets connected to the mixing service Tornado Cash when it was sanctioned by the Office of Foreign Assets Control (OFAC) in August. The decision to freeze the funds angered MakerDAO’s founder Rune Christensen, who said that he wanted to find a way of ditching USDC from its reserves, even if it meant depegging from its dollar price point.
This is no small task, given that USDC currently makes up about 52% of DAI’s backing, and so it seems that MakerDAO has been looking for other ways to make use of the USDC without having to rely on it for DAI backing.
Pilot Scheme To Run To End of 2022
This desire resulted in MIP81, a proposal to custody 33% of MakerDAO’s $4.42 billion in USDC into Coinbase Prime at a rate of 1.5% interest, while also issuing it a $500 million at a healthier rate of interest. The vote passed easily, with 75% voting yes, meaning what MakerDAO refers to as a pilot scheme will go ahead imminently, lasting until the end of the year.
If all parties are satisfied, and if MakerDAO likes its reserves growing by $4 million in the period, it will continue into 2023.