Coinbase Plans to Transfer Maker's $1.6B Peg Stability Module (PSM)

Maker's $1.6 Billion Peg Stability Module (PSM)
USDC Using Coinbase Prime

On the MakerDAO governance forum, Coinbase posted a proposal to move 33% of Maker's $1.6 billion Peg Stability Module (PSM) into a Coinbase Prime custody account, boosting Maker's revenue by almost $24 million. If approved, the proposal would give Maker a $528 million USDC annual dividend of 1.5 percent.

Maker's $1.6 Billion Peg Stability Module (PSM)

After the Covid crash in 2020, when the protocol saw the peg move above $1, Maker's PSM was developed to hard-peg the price of DAI to $1. Because ETH fell by more than 40% during the meltdown, there was an increase in demand to pay off debt liquidations. Although PSM has been successful in keeping DAI's peg, one of the critical problems mentioned on the forum by adcv, a member of Maker's strategic finance core team, is Maker's capacity to invest its balance sheet properly. Adcv wrote,

Maker's current PSM asset allocation is "highly underinvested," which "reduces the protocol's ability to take the risk and its attractiveness as a stablecoin,"

USDC Using Coinbase Prime

If the proposal is approved, Maker can freely mint, burn, withdraw, and settle its assigned USDC using Coinbase Prime and pay no custody costs on its PSM allotment to Coinbase. This idea is a tactical action that will bring money into MakerDAO's balance sheet from idle assets.

Disclaimer: The views and opinions expressed in this article are for informational purposes only and do not constitute financial, investment, or other advice. Investing in or trading crypto assets comes with a risk of financial loss.

Coinbase MakerDAO Peg Stability Module Coinbase Prime

Coinbase Plans to Transfer Maker's $1.6B Peg Stability Module (PSM)

Usha Yadav

Usha is a diehard crypto enthusiast and has been actively writing on different facets of the blockchain and crypto world. She has authored many research articles on cryptocurrency and aims to provide informational and quality content to readers. She firmly believes that crypto has a great potential to redefine the world of finance and blockchain.