Gemini’s offer to deposit stablecoin with Maker is the latest temptation for CeFi
MakerDAO, the leading DeFi protocol, is increasingly being tempted by enticing offers from large centralized players.
In its latest potential association, the leading DeFi protocol maintains an offering from Gemini, the crypto exchange founded by the Winklevoss twins. According to a proposal by Tyler Winklevoss published Sept. 30, Gemini is offering to pay Maker a 1.25% annual interest rate on deposits of GUSD, its dollar-backed token.
In exchange, Maker must hold more than GUSD 100 million in its Peg stability module. The module known as PSM preserves MakerDAO’s $1 stablecoin DAI by allowing users to trade the token one-for-one with other stablecoins.
New source of income
The deal could accelerate the adoption of GUSD in the MakerDAO ecosystem, Winklevoss said. That would be beneficial for Gemini, which wants to keep up with competitors like Binance. As for Maker, the agreement would give it a new revenue stream during a rough bear market. Earlier this month, Coinbase MakerDAO offered to deposit $1.6 billion on its institutional platform called Prime in exchange for a 1.5% annual return.
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The proposal could alter Christensen’s bid to reduce reliance on centralized revenue
But first, the Maker community must agree to the deal, and one key figure — Rune Christsensen, the former CEO of the Maker Foundation — may not accept the offer. He has urged the maker community to wean the protocol from exposure to centralized stablecoins and regulatory risks.
Just a month ago, the Maker community debated whether to launch DAI, its widely used stablecoin, and limit the protocol’s exposure to CeFi stablecoins. Now, centralized issuers look like they could be Maker’s best source of income, and the community is largely embracing these deals.
The Gemini deal was negotiated in partnership with Maker’s Strategic Finance Core Unit and Growth Core Unit. Gemini will start tracking PSM’s GUSD holdings from October 1st. It pays Maker interest on the last day of each month, provided the module holds at least GUSD 100 million on average during the month.
First offer
The initial offer is valid for three months. Winklevoss said Gemini will decide at the end of December whether to extend the offer.
MakerDAO is a collateralized debt protocol that allows users to mint its DAI stablecoin against posted collateral. According to Daistats, it is the largest DeFi protocol with a total locked value of $8.6 billion.
According to data from Dune Analytics, Maker’s module currently only holds GUSD 24,400.
In this way, all PSM pairs should be integrated in the future.
truthmaker
The proposal was supported by the MakerDAO community, with several members arguing that the protocol should select assets for its module to generate revenue.
“This is how all PSM pairs should be integrated going forward,” said Truemaker, a distinguished governance delegate. “The PSM benefits DAI by keeping its peg close to $1.00, but it also benefits collateral by providing stability so they can continue to grow and generate income from their collateral, which we should be compensated for. “
deepening of the rift
“Going forward, we should favor PSM vaults with at least an appropriate commitment to the MakerDAO ecosystem and strongly discourage vaults that don’t meet our goals,” said adcv of Maker’s Strategic Finance Core Unit.
But the proposal also reveals a deepening rift between the Maker’s Strategic Finance Core and Growth Core teams and Christensen.
Teams have been negotiating deals for stablecoin issuers to pay yields on MakerDAO’s large reserves over the past few months. Negotiations are taking place despite Christensen calling for a restructuring of the project structure.
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Christensen co-founded MakerDAO in 2014, but dissolved his foundation and resigned from the project in July 2021, leaving a decentralized DAO to govern Maker going forward.
But Christensen has become increasingly active on MakerDAO’s forums in recent months, posting several lengthy manifestos outlining his vision for moving forward with the project.
In July, Christensen criticized Maker’s DAO-based governance for being plagued by voter apathy and competing interests, advocated a reorganization into multiple subDAOs, and called for greater adoption of real-world assets (RWAs).
New Manifesto
In late August, Christensen released a new manifesto in response to Centre, the consortium behind centralized stablecoin USDC, which froze 38 wallets after the US Treasury sanctioned addresses associated with cryptomixer Tornado Cash.
This time, Christensen called on MakerDAO to limit its exposure to RWAs (including USDC), release DAI against the dollar and make plans for an emergency shutdown and revival if its PSM contracts are hit by US sanctions.
Just two weeks after Christensen’s last post, Coinbase offered to pay MakerDAO a 1.5% yield to deposit up to $1.6 billion USDC on its institutional platform Prime, following negotiations with its Strategic Finance Core and Growth Core units makers
recoil
USDC is the largest asset tied into MakerDAO, with the asset currently accounting for 42.4% of DAI’s support and another 15% coming in the form of Uniswap LP tokens for the DAI/USDC pairing.
While the proposal was rejected by Christensen’s supporters, many in the community supported the proposal. “Many of us think that Rune’s efforts to become DAO CEO are misguided and tired of the pointless drama he is orchestrating,” commented Tosh9.0, a community member.
Christensen’s call to reduce exposure to real assets also came shortly after maker governance voted to issue a 100 million DAI loan vault to Huntingdon Valley Bank, a 151-year-old Pennsylvania lender, and a subsidiary France’s third largest bank, Societe Generale, to provide a 30 million DAI line of credit.
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