Coinbase is looking to onboard MakerDAO, the organization behind the largest decentralized stablecoin, to Coinbase Prime. The proposal will enable Coinbase to custody $1.60 billion USDC from the protocol's Peg Stability Module (PSM) for an estimated $22.5 million per annum yield.

Specification

• Maker Governance will approve an arranger to facilitate onboarding to Prime via Coinbase, Inc., with custody provided by CCI.

• Maker will pay zero custody fees on USDC held with Coinbase Prime.

• Maker Governance will be able to freely mint, burn, withdraw, and settle almost instantaneously in USDC (<6 mins), consistent with Coinbase Prime’s standard offering.

• Rewards from the USDC account with Coinbase will be calculated based on the weighted average of assets on the platform each month and paid on the 5th business day of the following month.

• Each month, Coinbase will calculate the weighted average holding of the account.

• Coinbase will pay rewards based on our USDC Institutional Rewards POC program rates:

  • 100bps APY on first 100mm
  • 10bps more APY on each 100mm thereafter
  • Rewards rate will be paid based on the highest tier the client falls into
  • Rewards are not to exceed 150bps APY

• USDC Institutional Rewards POC will be in effect until the end of 2022, and the final payment will be made on the subsequent month. Rewards will be paid into the client’s account in USDC.

They have submitted a MIP for comments, there would not be an agreement unless the proposal is completed and formally submitted for approval by the MKR holders. It is now up to the MKR holders to review the proposal and vote. If the proposal is approved, it will be sent to the Maker Foundation for final approval. You can check out the proposal and the conversation on it here.

This move by Coinbase is seen as a way to further solidify their position in the cryptocurrency industry, as well as to provide more value to their Prime customers. Prime is Coinbase's institutional platform which offers services such as OTC trading, staking, and lending.

The addition of MakerDAO to Coinbase Prime would be a significant win for the organization. It would open up a whole new range of potential customers and use cases for the Prime platform.

MakerDAO is the largest decentralized stablecoin protocol in the world. The organization behind it, Maker Foundation, is a non-profit that is responsible for the development and maintenance of the protocol.

The Maker Protocol is a system of smart contracts that runs on the Ethereum blockchain. It is designed to create and manage a decentralized stablecoin called Dai.

Dai is a stablecoin that is pegged to the US dollar. It is collateralized by Ethereum and other digital assets.

The Peg Stability Module (PSM) is a system of smart contracts that is responsible for maintaining the peg of Dai to the US dollar.

Rune Christensen's Big Push to Retool MakerDAO | What does it mean?

As the stablecoin industry continues to grow and evolve, one of the leading protocols, MakerDAO, is proposing a number of changes to its model in order to adapt to the changing landscape. The proposal comes amid a big push by Rune Christensen, the founder of MakerDAO, to retool the protocol and address a number of challenges, including the U.S. government's sanction of Tornado Cash and fears more sanctions in the industry could sink stablecoin providers like MakerDAO.

The proposed changes to the MakerDAO protocol are designed to address three main areas:

1. The need for greater flexibility in the types of collateral that can be used to back the Dai stablecoin

2. The need for improved risk management

3. The need for a more robust governance model

With regards to the first point, the proposed changes would allow for a wider variety of collateral to be used to back the Dai stablecoin. This would include both traditional assets like fiat currencies and commodities, as well as new asset classes like crypto assets.

Coinbase’s recent announcement that it plans to split USDC yields with Maker could undermine Christensen’s plan by making the protocol reliant on the centralized stablecoin for revenues.

The second point addresses the need for improved risk management. The proposed changes would introduce a number of new risk management tools, including the ability to force a liquidation of a position that is becoming too risky.

Finally, the third point addresses the need for a more robust governance model. The proposed changes would formalize the governance process and give holders of the Dai stablecoin a greater say in how the protocol is run.

It remains to be seen how this will all play out, but it’s definitely a situation worth monitoring. Christensen’s plans for Maker could have a major impact on the future of decentralized finance, and Coinbase’s decision could definitely put a wrench in those plans.

Overall, the proposed changes to the MakerDAO protocol are aimed at making the protocol more adaptable and resilient in the face of a changing landscape.