MakerDAO, the community behind the DAI (CRYPTO: DAI) stablecoin, just passed two Maker Improvement Proposals, MIP 81 and MIP 82.
What Happened: The MIP 81 will send $1.6 billion worth of MakerDAO’s USDC to Coinbase (NASDAQ:COIN) Global Inc (NASDAQ: COIN), for its institutional rewards pilot program. This gives Coinbase access to the USDC, and will in turn provide MakerDAO with safe storage and a 1.5% return on the USDC.
The MIP 82 will facilitate a USDC loan from MakerDAO to Coinbase, worth $500 million. The loan is collateralized by Ethereum (CRYPTO: ETH) and Bitcoin (CRYPTO: BTC), and will earn MakerDAO 4.5% - 6% of variable interest, paid monthly.
Also Read: Can Bitcoin Hard Fork To Proof-Of-Stake Consensus? What It Would Mean For The Apex Crypto
Why is it Important: This series of events is important for a couple of reasons. Firstly, it shows further centralization of the MakerDAO protocol.
The purchasing of USDC, a rather centralized stablecoin, was controversial among the community as it symbolized a willingness to risk the decentralization of the protocol for financial security. Now, by getting further embedded with Coinbase, the protocol is increasingly at the mercy of large, centralized entities.
On the other hand, Coinbase is known for its secure custody of crypto assets, so the move makes sense on this front. Also, it begins to put the USDC to work, earning the MakerDAO interest.
The MakerDAO has ultimately decided to play ball with centralized entities in order to benefit their protocol financially.
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