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MakerDAO Deploying $100M USDC to Boost Annual Yield

The decentralized finance (DeFi) firm MakerDAO announced in a January 23 update that the community voted in favor of approving the suggestion to deploy USD coin (USDC) worth $100 million worth from the reserve on the DeFi platform Yearn Finance. The move by the community to approve the decision is set to enable MakerDAO to earn a 2% yield annually.

Deriving Earnings from USDC Stablecoins Deposits

The decision by the community will enable MakerDAO’s derive additional earnings from the USDC stablecoin deposits. Maker is set to initiate a fully-owned non-custodial vault on the Yearn Finance protocol. It targets to deposit USDC stablecoins capped at $100 million from the peg stability module (PSM). The Maker suggested that it intends to better use the reserves currently backing the Maker’s stablecoin DAI. 

The suggestion to optimize the resources within the Maker’s PSM took place in November, projecting to earn a 2% yield from the secondary venture. The strategy’s viability won the majority’s support, with 72% of the voters approving the plan. 

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Governance via Votes

Lauding the optimism demonstrated by the community when approving the strategy, MakerDAO’s tweet on Monday, January 23, acknowledged the voters for their quick action. The tweet revealed that the strategy is still subject to an executive vote to approve the strategy’s implementation and initiate a funds transfer from the PSM. 

Subjecting the November proposal to the vote by the community helped silence critics, who have continually portrayed Maker as an entity run through politics. Instead, the recent vote to optimize the USDC reserves affirms the entity’s reputation as one running as a decentralized autonomous organization. It allows holders of governance tokens (MKR) to vote autonomously on proposals. 

Maintaining Steady Revenue Streams 

The approval of the proposal by the executive will give the green light to a core element of its current strategy to maintain steady revenue streams. The strategy suggests partially allocating $7 billion in reserve assets in yield-generating opportunities, including investment in US government bonds and partnership with Coinbase (COIN) custody product. 

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The strategy is set to boat earnings for the DAI holders who recently admitted receiving 1$ reward from the higher income. The recent move will simulate user activity in the Yearn, which has lately witnessed declining volumes. In particular, DefiLlama regretted the decline since the total value locked within the DeFi protocol plummeted from $6.9 billion in 2021 to $442 million in December 2022.  

Editorial credit: Piotr Swat / Shutterstock.com


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Stephen Causby

Stephen Causby is an experienced crypto journalist who writes for Tokenhell. He is passionate for coverage in crypto news, blockchain, DeFi, and NFT.

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