coinjournal.net
- The MakerDAO community has voted to ditch Pax Dollar ($USDP) stablecoin worth $500 million from its reserves.
- Maker’s treasury holds roughly half of the $USDP’s $1 billion supply.
- New York state regulators in February forced Paxos to halt minting Binance USD ($BUSD) stablecoin.
The decentralized finance (DeFi) lending protocol MakerDAO’s community has voted to drop the $500 million worth of $USDP stablecoin from its reserves. This is a major blow to the Pax Dollar ($USDP) stablecoin since the lending protocol held half of the $USDP token supply.
In total, there is a $1 billion $USDP token supply and after the vote, Maker will remove all the 500 $USDP tokens from its reserves.
After dropping the $USDP, MakerDAO, which is the issuer of the $5 billion $DAI stablecoin and the governing body of Maker, which is one of the largest lending protocols in DeFi, will boost its revenues by investing its vast reserves in yield-generating strategies.
Examples of the yield-generating strategies that MakerDAO will invest in include Gemini, which pays an incentive to MakerDAO for holding its stablecoin, the GUSD. MakerDAO is also primed to earn a 2.6% yield on the $500 million of USDC it holds from Coinbase Prime.
Impact on the embattled Paxos
Paxos was in February forced by New York state regulators to halt minting Binance USD ($BUSD) stablecoin. Since then, the market cap of the $BUSD stablecoin has drastically declined from $16 billion to $5 billion according to data from Coingecko.
Although the Pax dollar metrics remained largely unaffected, the MakerDAO move has a significant impact on Paxos as a company.
The MakerDAO community argued that the $USDP did not accrue any revenue for MakerDAO, something that hurt its capital efficiency as it plans to increase the rewards rate for $DAI savings.