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The MakerDAO community has approved a proposal to deploy around $100 million worth of $USDC into Yearn Finance.
The decision to deposit the funds on Yearn Finance will allow MakerDAO to earn an annual yield of around 2% on the stablecoin deposits.
MakerDAO To Deposit $100 Million On Yearn
Decentralized finance (DeFi) protocol MakerDAO’s community has approved a proposal to deploy $100 million in USD Coin ($USDC) on the DeFi protocol Yearn Finance. The funds will be deposited in a special investment account called a “vault,” which is managed by Yearn Finance. The vault’s ceiling will be set at $100 million and will allow MakerDAO to earn a yield of around 2% per year, totaling around $2 million on an annual basis.
“Maker Governance voted to deploy 100 million $USDC from the PSM into a bespoke @iearnfinance on-chain vault.”
Strong Support For Proposal
The proposal to deposit the funds on Yearn was submitted in November 2022 and has found strong support within the Maker community. Around 72% of members voted in favor of the plan. The final implementation and the transfer of funds will require a further “executive vote,” according to the information shared by MakerDAO.
Talk of a partnership between MakerDAO and Yearn Finance was first suggested by Yearn Finance in November 2022. However, the partnership still requires a final approval through an executive vote. The executive vote is the final step in the MakerDAO governance process and is primarily used when implementing a technical change to the Maker Protocol.
In Line With Long Term Vision
MakerDAO’s move to deposit funds on Yearn Finance is in line with the protocol’s vision of earning a steady revenue stream by the allocation of a part of its reserve assets to several yield-generating strategies such as investing in US government bonds and partnering with cryptocurrency exchange Coinbase. Under the partnership with Coinbase, Coinbase proposed that MakerDAO deposit around $1.6 billion worth of USD Coin ($USDC) on the platform, allowing the latter to earn an annual yield of 1.5% per year.
MakerDAO has also allocated $USDC on a number of other decentralized finance platforms, including Idle Finance, Aave, and Compound. Additionally, DAI stablecoin holders have also received an annual reward of 1% since last month. MakerDAO is a platform managed by a decentralized autonomous organization (DAO), with holders of the MKR token being able to vote on governance proposals.
The move to deposit $USDC on Yearn could also improve the protocol’s dwindling user activity. Yearn Finance’s total value locked (TVL) is currently at around $442 million. This is a small fraction compared to the protocol’s all-time high TVL of $6.9 billion, which was reached in December 2021, according to data sourced from DeFiLlama. The total value locked is an indicator of the worth of the assets deployed on a protocol.
An Active Community
The MakerDAO community has been quite active when it comes to governance proposals and recently voted on two important proposals related to Alameda Research and Gemini’s $GUSD stablecoin. In November 2022, the protocol announced that the community had voted on and passed a governance vote to remove the Alameda Research-linked RenBTC from its collateral vaults. The move was made to reduce the exposure to what the DAO deemed a risky asset following the collapse of FTX and Alameda Research.
The MakerDAO community is also debating about keeping Gemini’s $GUSD stablecoin as part of the reserves. The vote comes amidst growing concerns about a liquidity crisis that has impacted Gemini’s Earn program. Maker and Gemini had announced a partnership in September 2022, which allows Maker to earn 1.5% whenever the $GUSD in Makers Peg Stability Module (PSM) goes above $100 million.
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.