Paxos recently collaborated with MakerDao to mutually benefit from increased Pax Dollar(USDP) in the Peg Stability Module(PSM). Paxos will pay MakerDao a monthly marketing fee.
Per the proposal, Paxos aims to boost the USDP in PSM on MakerDAO to $1.5 billion from the current $450 million. PSM is an essential tool of the MakerDAO system that enables it to maintain the value of its algorithmic stablecoin, which is pegged to the US Dollar.
The proposal:
“The Daily Marketing Fees will only be paid if the USDP PSM’s Max Debt Ceiling is at or above a threshold of 1.5B USDP during that day. This threshold will increase to 2B USDP in 2024.
Paxos will be paying Monthly Marketing Fees to MakerDAO starting the day the changes are implemented on-chain.
Both Paxos and USDP are regulated and supervised by a prudential regulator, the New York Department of Financial Services (NYDFS).
USDP is fully backed 1:1 by cash and debt instruments expressly guaranteed by the full faith and credit of the United States Government (e.g., US Treasuries), including reverse repurchase agreements collateralized by such debt instruments or money-market funds composed of such debt instruments.
Paxos has strong partnerships with leading Market Makers that can help take advantage of any arbitrage opportunities and support DAI’s peg by using the USDP PSM and issuing/redeeming USDP on the Paxos platform.”
As of January 20, 2023, MakerDAO, a decentralized finance platform, supports keeping Gemini’s GUSD stablecoin as a portion of Maker’s reserve. Also, the MakerDAO community has voted to keep the Gemini Stable coin GUSD.
The community decided to preserve the GUSD ceiling at the existing $500 million instead of reducing it to zero, which would have essentially kicked GUSD out of the reserve.
Other than that, community discussions GUSD’s worth is somewhat supported by cash kept at Silvergate Capital. This castellated crypto-friendly bank is facing headwinds in the aftermath of multiple crypto firms closing shop since the beginning of last year.
According to Defi Llama, the Total Value Locked(TVL) of MakerDao is $7.21b and is ranked second in the list. Earlier, MakerDao was in the first position, but recently, Lido TVL acquired the first position in the market.
At the time of writing, Maker(MKR) governance token of MakerDAO was trading at $714.59 with a 24-hour trading volume of $24,137,439.
Nancy J. Allen is a crypto enthusiast and believes that cryptocurrencies inspire people to be their own banks and step aside from traditional monetary exchange systems. She is also intrigued by blockchain technology and its functioning.
Source: https://www.thecoinrepublic.com/2023/01/23/paxos-collaborates-with-makerdao/