MakerDAO Transfers $500 Million to Coinbase Custody

• MakerDAO transfers $500 million to Coinbase’s custodial arm Coinbase Custody.
• The crypto lending protocol acknowledged the funds have been transformed to USDC utilizing the PSM.
• Coinbase Custody will now pay MakerDAO a 2.6% annual yield on deposits.

Crypto lending protocol MakerDAO transferred $500 million to international cryptocurrency change Coinbase’s custodial subsidiary, Coinbase Custody. By this transfer, MakerDAO ensures an annual rewards price of two.6%, which interprets to an estimated annual revenue of 13 million DAI.

Concerning the switch, Coinbase Institutional (@CoinbaseInsto) tweeted:

Yesterday, MakerDAO revealed Coinbase deployed 500 million DAI from the Coinbase Custody vault. Following the approval of the Coinbase Institutional Rewards proposal by Maker Governance, the funds have been transformed to USDC utilizing the PSM (Peg Stabilization Module).

Subsequently, the transformed funds have been deposited into the desired Coinbase Custody account. Coinbase acknowledged this switch is step one in its USDC institutional rewards program launched in This autumn 2022.

Reeling again to April 2023, the MakerDAO neighborhood authorised a proposal of opening a real-world asset (RWA) vault for Coinbase Custody after which a switch of as much as $500 million in USDC.

In line with the proposal, Coinbase Custody is strictly prohibited from rehypothecating the belongings held within the specified account. Which means they aren’t allowed to lend, reinvest, or make the most of the deposited belongings in every other method.

The crypto lending protocol has the power to withdraw funds from the vault inside a 24-hour timeframe, and the funds saved in chilly storage are insured as much as the restrict of $500 million.

Even earlier than that, in October 2022, the MakerDAO neighborhood granted approval to a Coinbase proposal, permitting them to custody a most of $1.6 billion USDC by way of Coinbase Prime. MakerDAO was set to earn a 1.5% reward on its USDC whereas holding funds with the institutional custodian.