- MakerDAO proposed to move $ 100 M USDC to Yearn Finance in November, 2022
- According to the proposal, the estimated conservative yields from Yearn could account to 2%
- Yearn Finance’s price shot by 8.55% post the announcement
MakerDAO (MKR), the largest decentralized finance platform passed a proposal to move $100 M USDC from its reserves to Yearn Finance on Monday, January, 23. According to the proposal the platform will receive a return of 2%.
The DAO will open a non-custodial vault on Yearn Finance with a hard cap of $ 100 M USDC. The stablecoin belongs to Maker’s ‘Peg Stability Module’ which is backed by MakerDAO’s stablecoin DAI. Peg Stability Module (PSM) swaps users’ collateral with Maker’s stablecoin DAI. The proposal has received 72% votes in favor of the proposal. The proposal will be finalized post the executive vote call.
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Maker Governance voted to deploy 100 million USDC from the PSM into a bespoke @iearnfinance on-chain vault.
— Maker (@MakerDAO) January 23, 2023
The shift in MakerDAO ‘s fund allocation is a strategy to gain better yields for its members. The liquidity of $ 100 M USDC comes from MakerDAO’s 7 billion reserves. Maker has been on a scavenger hunt to find the best platforms for yield optimization. It has partnered with Coinbase’s custody platform (COIN) and US government bonds. DAI stablecoin holders are receiving 1% in returns in the last month. MakerDAO’s proposal stated,
“The recent collapse of centralized entities such as Celsius, BlockFi, and FTX, among others, has made painfully clear the importance of transparency when depositing funds to generate yield—something that DeFi, and specifically Yearn, are well-equipped to provide.”
MakerDAO has been all the more focused on generating yields post Sam Bankman Fried’s FTX exchange shakedown. To showcase complete transparency the DAO called for the Maker Improvement Proposal (MIP) 92.
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Yearn Finance moving to the green side of the heat map
Yearn Finance – a decentralized finance protocol saw a jump of 8.55% in 24 hours. The potential liaison with MakerDAO has put Yearn Finance (YFI) on the map. The altcoin saw a recovery of 52% from its last low price. It was trading at $7712 (INR 6,28,537.25) post the announcement. The asset could spike to $8559 as a positive price impact for DeFi’s native token YFI.
GUSD on MakerDAO
MakerDAO is the second biggest DeFi protocol in the world despite losing 63% of its Total Locked Value (TVL) in the last 13 months. The members of MakerDAO had raised concerns about the GUSD stablecoin’s reliance on PSM. MakerDAO’s community voted to keep the Gemini USD (GUSD) stablecoin as part of its reserve system for its DAI stablecoin in a nail biting governance vote. In a poll,, 50.85% of the votes were in favor of keeping the GUSD debt ceiling at the $500 million level in Maker’s Peg Stability Module (PSM), while 49.15% voted for decreasing to zero. This resulted in GUSD remaining as a reserve asset for Maker’s $5 billion DAI. The DAO’s treasury earns a 1.25% annual yield for holding GUSD as a reserve asset.