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MakerDAO Approves Deployment of $100M USDC on DeFi Protocol Yearn Finance

MakerDAO Approves Deployment of $100M USDC on DeFi Protocol Yearn Finance

MakerDAO Approves Deployment of $100M USDC on DeFi Protocol Yearn Finance

The decision opens the way for MakerDAO to earn an estimated 2% annual yield on USDC stablecoin deposits.

The decision opens the way for MakerDAO to earn an estimated 2% annual yield on USDC stablecoin deposits.

The decision opens the way for MakerDAO to earn an estimated 2% annual yield on USDC stablecoin deposits.

AccessTimeIconJan 23, 2023, 6:47 PM
Updated Jan 23, 2023, 7:10 PM
The MakerDAO community approved to open a $100 million USDC vault on Yearn Finance. (Cleveland Trust Co., modified by CoinDesk)

Decentralized-finance (DeFi) giant MakerDAO’s community approved Monday a proposal to deploy up to $100 million in USD coin (USDC) from its reserve on DeFi protocol Yearn Finance, where the deposited stablecoin will earn a yield.

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.

According to the proposal submitted at the end of November, MakerDAO is predicted to earn a 2% annual yield with the strategy.

Some 72% of voters favored the plan. For final implementation and the transfer of funds from the PSM, a further “executive vote” is necessary, according to MakerDAO’s tweet.

Maker is managed by a decentralized autonomous organization, where holders of the maker (MKR) governance token can vote on proposals.

The maneuver is part of Maker’s strategy to earn a steady revenue stream by allocating a part of its $7 billion in reserve assets to various yield-generating strategies such as partnering with crypto exchange Coinbase’s (COIN) custody platform and investing in U.S. government bonds. DAI holders are receiving a 1% annual reward as a result of increased income since last month.

The move may also boost Yearn’s dwindling user activity. The protocol’s total value locked, a popular indicator to show the worth of assets deployed on a DeFi protocol, has dropped to $442 million from an all-time high of $6.9 billion in December 2021, according to data from DefiLlama.

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Krisztian Sandor is a reporter on the U.S. markets team focusing on stablecoins and institutional investment. He holds BTC and ETH.