Cryptocurrency exchange Coinbase has entered into an agreement with decentralized finance (DeFi) platform MakerDAO to host USDC stablecoin collateral.
The MakerDAO community has voted in favor of a $1.6 billion USDC stablecoin collateral proposal on Coinbase Prime, an institutional brokerage platform. Thus, Coinbase expanded its USDC rewards program to the level of an institutional client.
The proposal was ratified by 75% of the community. MakerDAO will store funds on Coinbase Prime, earning 1.5% on them. MakerDAO Growth and Development Specialist Jennifer Senhaji noted that the additional monthly revenue generated from this transaction “will enable MakerDAO to further advance its mission to create a global, secure, decentralized financial future.”
However, this move undermines some of the decentralized properties of the DAI stablecoin, as it is now heavily backed by USDC. USDC makes up a third of the reserves that provide the stability of the peg, which allows users to deposit collateral for the issuance of the DAI stablecoin.
Coinbase recently reported that the volume of USDC stablecoin trading with the US dollar is significantly higher than with other currencies. This is due to commissions when exchanging a token for fiat currencies.
Source: Bits
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