MakerDAO joins hands with Coinbase, becomes the largest holder of USDC

On October 24, crypto exchange giant Coinbase has announced that MakerDAO governance has voted in favor of the proposed custody of $1.6 billion USDC with Coinbase Prime.

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

This indicates that Coinbase has for the first time made its USDC rewards program available to an institutional client. In exchange for a 1.5% fee, MakerDAO will hold the funds with Coinbase Prime, the company’s institutional broker. On October 24, the proposal received 109,944 MKR tokens, or 75% of the vote.

Stablecoins will undoubtedly play a significant role in the future of banking, according to Coinbase. Over the past few of years, Tether (USDT), the market leader of the stablecoin sector, has lost a major market share to USD Coin.

MakerDAO becomes the largest holder of USDC

With the recent move, MakerDAO has become the largest holder of USDC. The additional monthly income from this agreement, according to Jennifer Senhaji, head of growth and business development at MakerDAO, “enables Maker to further advance its overarching mission to create a global, trustless financial future built on decentralized rails.”

However, because it is now primarily collateralized by a centralised stablecoin, the move weakens some of the decentralised features of Maker’s stablecoin DAI. Notably, USDC represents around 33% of the treasury backing the Peg Stability Module that enables users to deposit collateral to mint DAI.

The expansion of Maker’s collateral into physical assets and short-term bonds is a component of phase one of its “Endgame Plan.” DAI will eventually become a free-floating asset with no linking to the dollar as part of the plan’s long-term objectives.

Maker will double down on physical assets over the next three years to collect Ethereum and raise the proportion of decentralised collateral.

This month, MakerDAO also announced its plans to invest $500 million in US Treasury and investment-grade corporate bonds, as TheCoinRise reported.

During the weak market of 2022, when tech stocks and cryptocurrency markets had high correlation, Coinbase stock, which has suffered severe volatility in the past months, took a beating.