The MakerDAO community rejected a proposal to use up to $500 million of the stablecoin USDC to invest in bonds with crypto investment firm CoinShares.
Some 72% of votes were cast against the proposal. The voting concluded Monday.
The rejection came as MakerDAO is in the process of investing billions of dollars from its reserve and optimizing its balance sheet to earn revenue from yields.
A web of collaborating teams called decentralized autonomous organization (DAO) manages the protocol through public discussions in its forum, and holders of MKR, the protocol’s governance token, vote on proposals.
Starting earlier this year, multiple institutional fund managers such Coinbase and Gemini pitched to MakerDAO their plans to allocate a part of its reserve in yield-generating rewards programs, including investing in treasuries.
The community approved last month a plan to allocate $1.6 billion to Coinbase Prime, the crypto exchange’s custody arm, for a 1.5% annual reward and another $500 million to a consortium of hedge fund Appaloosa and crypto broker Monetalis to provide crypto-backed loans for a 4.5-6% expected annual yield.
BlockTower Capital, a digital asset investment firm, pitched last month to acquire up to 600 million USDC from MakerDAO and invest the funds in structured credit and money market funds. The community is yet to vote on the proposal.
"We have plenty of proposals and only a few billions of capital," Sebastien Derivaux, an asset-liability manager for MakerDAO, told CoinDesk.
CoinShares cited the recent turmoil in crypto markets as the primary reason for the rejection.
"Several delegates have recently told us that they are reluctant to vote for our proposal and the other PSM management proposals in light of market conditions (FTX implosion and Genesis insolvency) as they want to see a cooling down of the industry," according to a statement by CoinShares sent to CoinDesk in an email.
A spokesperson to the firm said that CoinShares intends to improve its pitch and propose it again in the coming months.
UPDATE (Nov. 28, 18:21 UTC): Adds context, proposals previously approved and CoinShares' statement to the story.
UPDATE (Nov. 28, 18:45 UTC): Adds BlockTower Capital's proposal and comment from Sebastien Derivaux.
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