Coinbase Proposal Could See MakerDAO Earn $24M Annually

Coinbase has just submitted a proposal that could see MakerDAO earn $24 million annually if its community approves. 

The proposal comes just days after Rune Christensen’s big push to make the MakerDAO protocol reduce its reliance on USDC as collateral. 

The Coinbase Proposal  

The proposal from Coinbase could influence MakerDAO to make significant changes in its strategic growth plan. The Coinbase proposal states that MakerDAO deposits around 1.6 billion USDC into Prime, its institutional platform. If the proposal is passed, it could see MakerDAO earn an annual yield of 1.5%, which translates into an additional $24 million in yearly revenue. 

MakerDAO allows users to mint its DAI stablecoin against collateral deposited by users into its protocol. Initially, the platform only supported ETH as collateral but has expanded to include support for over a dozen new assets as collateral. According to data sourced from Daistats, USDC comprises a significant chunk, roughly a little over a third of its $9.3 billion total value locked. 

Undermining Christensen’s Plans For MakerDAO 

The proposal from Coinbase comes amidst a push by the founder of MakerDAO, Rune Christensen, to remodel the protocol and reduce its reliance on USDC, helping it adapt to a host of challenges such as the sanctioning of Tornado Cash by the US government. Rune also hopes that cutting down reliance on centralized stablecoins could help guard the protocol against further sanctions that could potentially sink stablecoin issuers like MakerDAO. 

The Coinbase proposal could undermine Christensen’s plan to make MakerDAO less reliant on stablecoins for revenue. While he does not play any official role in MakerDAO, Christensen remains an influential voice in the community and has batted for the protocol to float DAI against the US dollar. This move would have significantly reduced the protocol’s reliance on USDC and other assets in the next few years, capping its exposure to real-world assets to 25% by 2026. According to Christensen, this move would protect the protocol after Centre, the USDC issuer, blacklisted several wallets after the Tornado Cash sanctions. 

“Three years is the longest we can go before we have to be ready to accept the seizure of all centralized collateral.”

A Divided Community 

The Coinbase proposal has divided the MakerDAO community, with some members stating that with the yield on offer, Christensen’s plan should be shelved for the time being. Community members stated that Maker’s balance is highly underinvested and is detrimental to the protocol’s ability to take risks and attractiveness as a stablecoin. 

“With this [proposal], the puzzle pieces start to fall into place.”

Immunefi’s Psychonaut also expressed their support for the proposal, stating, 

“Can we stop all this chatter about offboarding and belt-tightening already?”

Another member, Toch9.0, also criticized Christensen’s plan, stating, 

“There are many of us who think Rune’s efforts to be the DAO CEO are misguided and are tired of the senseless drama he creates.” 

However, it was not all brickbats for Christensen, as the Coinbase proposal also received considerable flak from sections of the community. MakerDAO delegate Doo_Nam opposed the proposal, calling it shortsighted and that protocol revenue should benefit MKR token holders before anyone else. Chris Blec slammed the Coibase proposal, stating that USDC poses an existential threat to DAI and needs to be eliminated. 

“Moving the USDC to Coinbase will add yet another regulatory attack vector that the DAO needs to worry about. A vote for this proposal is a vote to place the entire fate of DAI and MKR in the hands of Coinbase, a publicly-traded corporation that does not have aligned interests with the not-so-decentralized MakerDAO.”

Meanwhile, MakerDAO is expanding its backing from real-world assets, despite Christensen’s calls. 

Disclaimer: This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.