Coinbase Offers MakerDAO 1.5% Interest on USDC held at Prime
Major crypto exchange Coinbase is looking to partner with the largest decentralized lending protocol, MakerDAO. Coinbase has offered to pay MakerDAO 1.5% interest if Maker onboards its holdings of USDC to Prime, Coinbase's institutional-grade investment platform.
In a proposal published on the decentralized autonomous organization's online forum, titled 'MIPXX Coinbase USDC Institutional Rewards,' Coinbase Institutional said that the offer will solve MakerDAO's problem of overexposure to the dollar-pegged stablecoin which it is not earning any rewards for holding.
"Maker’s balance sheet is largely exposed to USDC — in exchange for zero holding reward… This MIP outlines a clear path to providing up to 1.5% APY on USDC in the form of USDC Rewards and optimizing liquidity at zero cost to, and industry-leading security for, Maker," CB Institutional said in the proposal.
Specifically, should the Maker Improvement Proposal (MIP) go through, it will onboard MakerDAO as an institutional investor on Prime. It will also facilitate the transfer of 33% or $1.6 billion of the Ethereum-based crypto lender's USDC holding to MakerDAO's account on Prime to earn around $24 million in one year.
Other terms include that MakerDAO pays zero custody fee while still being able to freely mint, burn, withdraw and settle almost instantly with USDC in line with Coinbase Prime's standard offering. The proposal adds that Coinbase is "uniquely situated" to make the offer as it is an established, reputable, and regulated company.
Significantly, the Coinbase proposal adds another dimension to deliberations that were ongoing before now for MakerDAO to reduce its exposure to USDC. With a USDC TVL of around $9.3 billion, the stablecoin which is issued by
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