Governance members of Dai stablecoin issuer MakerDAO community has approved a proposal to deposit around $100 million worth of USDC from its reserves into a special investment account known as a "vault" into Yearn Finance.
The decision to deposit the funds on Yearn Finance will allow MakerDAO to earn a yield of around 2% per year, totaling around $2 million on an annual basis.
This 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. According to the information shared by MakerDAO the final implementation and the transfer of funds will require a further “executive vote,”.
A total of 68 votes were cast with 95,666.284 of Maker’s native token MKR used to back the decisions. 71.56% of the votes supported the proposal to deploy USDC in Yearn Finance while 28.44% stood against the idea.
MakerDAO is a decentralized organization which focuses on bringing stability to the cryptocurrency economy. Maker Protocol employs a two-token system.
- First is Dai, a collateral backed stablecoin that offers stabillity.
- Second is MKR, which is a governance token that is used by stakeholders to maintain the system and manage Dai.
It has 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.
MIP92 proposed using Yearn on-chain vaults to earn yield on idle USDC. Recent collapse of centralized entities such as Celsius, BlockFi, and FTX, etc has made clear the importance of transparency when depositing funds to generate yield—something that DeFi, and specifically Yearn, are well-equipped to provide.
Yearn is uniquely positioned to offer Maker yield-generation opportunities across its USDC reserves while empowering the Maker community to continually audit the exact location and amounts of any and all deposited assets. Yearn is an established and reputable organization that shares Maker’s ideals around decentralization and safety. Yearn’s risk-adjusted vaults are battle-tested and have handled an all-time high of $6.4 billion. Since then, Yearn Vaults have successfully unwound $6 billion with no loss of funds.
Yearn aligns four with Maker’s safety-first strategy. Maker’s use of Yearn Vaults will further validate the case for Decentralized Finance where safety and transparency matter most.
As the next step MIP92 will involve an executive vote before the proposal which is either binned or implemented in Maker’s protocol.
Maker will open an individual non-custodial vault on Yearn with a ceiling set at $100 million to deposit USDC from its "peg stability module," or PSM, which backs the value of Maker’s decentralized stablecoin DAI.
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.
- Ratification Poll for Onboard PSM USDC to Yearn to earn Yield (MIP92) - January 9, 2023
- MIP92: Onboard PSM USDC to Yearn to earn Yield
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