MakerDAO Governance Update: PSM Deployment and MetaDAOs

MakerDAO continues to have extremely active governance participation, which means there is no shortage of important (and unimportant) governance proposals and forum posts. Here, we break down the need-to-know governance proposals over the last month that could impact the revenue, strategy, governance structure, and growth initiatives for Maker and DAI.

MIP Updates

Given the centralization concerns surrounding the stablecoins in the PSM, and the desire to diversify DAI’s backing into RWAs, most of the recent MIPs have been initiatives for deploying the PSM capital into various strategies in order to diversify that basket of collateral while earning yield. This is extremely important given current circumstances, where four of the last months Maker has been operating at a loss according to Seb Ventures, member of the Strategic Finance Core Unit.

MIP 81 & 82: Coinbase USDC (Passed)

The two MIPs that are making the most noise are those dealing with Coinbase partnerships. The first, MIP 81 introduced on Sep 6, calls for $1.6B idle USDC from the PSM to be deposited into Coinbase's institutional rewards program to earn rewards. This program allows institutional clients to deposit large amounts of USDC on Coinbase with zero custody fees and the ability to freely mint, burn, withdraw, and settle USDC using their platform. Depositors receive rewards of 100bps APY on the first $100M deposited and 10bps for every $100M after that with a maximum of 150bps. This allows Maker to earn 1.5% yield on what would otherwise be USDC just sitting in the PSM contract. The proposal was met with concerns around centralization and censorship risk that Maker has been worried about since sanctions were delivered to Tornado Cash users. This MIP has been approved via governance as of October 24th and the Strategic Finance Core Unit will begin the process of creating a new legal entity to onboard the assets into Coinbase.

The second of these initiatives is MIP 82, which will utilize Monetalis, a financial firm with very close ties to Maker, to onboard and activate a 500M DAI RWA vault in order to acquire USDC from the PSM and provide a loan to Coinbase. This loan will be equally split into terms of 6, 9, and 12 months with ETH or BTC provided as collateral. The interest is expected to be in the range of 4.5% and 6% APR paid on a monthly basis, and the loan will be kept at a target 125% collateralization ratio with a top up once this ratio reaches 120% and collateral take-out when it reaches 130%. This also passed a governance vote as of October 24th. Assuming a 4.5% yield and the full $500M borrowed, the addition of both of these initiatives gives Maker a $3.875M increase in revenue per month.

MIP 86: CoinShares