MakerDAO, one of the largest decentralized lending protocols, has approved the opening of a real-world asset (RWA) vault for Coinbase Custody. The move will allow for the transfer of up to $500 million in USDC stablecoins, according to a vote that concluded on Thursday. Coinbase Custody, the U.S.-based crypto exchange’s custodial arm, will pay a 2.6% annual yield on deposits, as per a related post on Maker’s governance forum. However, the proposal forbids Coinbase Custody from rehypothecating – lending, reinvesting, or using in other ways – the assets in the account.
The tokens in the account must be kept in cold crypto wallets, as favored by the Maker community in a parallel vote. The move will enable Maker to withdraw funds from the vault within 24 hours, and funds in cold storage are insured up to the $500 million limit. Maker is led by a decentralized autonomous organization (DAO), in which holders of its native maker (MKR) token vote on proposals. The protocol also issues the $5 billion DAI stablecoin, backed by some $7 billion worth of assets in Maker’s reserves.
The latest development is part of the earlier decision to transfer up to $1.6 billion USDC to Coinbase to earn yield. The platform has been pursuing a strategy to diversify its reserves and increase revenues by investing in yield-generating traditional financial assets, including U.S. Treasury bills and loans to banks.
The move comes at a time when the crypto industry is experiencing an unprecedented boom. The market capitalization of cryptocurrencies has surpassed $2 trillion, with Bitcoin alone accounting for more than $1 trillion. With institutional investors flocking to the space, the demand for crypto-related financial products has increased significantly.
The MakerDAO-Coinbase partnership is expected to provide institutional investors with a regulated and secure platform to invest in cryptocurrencies. Coinbase Custody is a qualified custodian, regulated by the New York Department of Financial Services, which provides institutional-grade security and storage for digital assets.
The partnership is also expected to boost the adoption of stablecoins, which are digital currencies pegged to the value of a real-world asset, such as the U.S. dollar. Stablecoins are increasingly being used in the crypto industry as a means of payment and as a store of value, as they offer the benefits of cryptocurrencies without the volatility.
The move also marks a significant milestone for MakerDAO, which has been at the forefront of the decentralized finance (DeFi) movement. DeFi is a fast-growing sector of the crypto industry that aims to create a decentralized financial system, using blockchain technology to provide financial services without intermediaries.
The MakerDAO-Coinbase partnership is expected to provide a boost to the DeFi movement, by providing a regulated and secure platform for investors to participate in decentralized lending and borrowing. With the crypto industry continuing to evolve and mature, partnerships like this are likely to become more common, as institutions look to enter the space and provide investors with new opportunities to participate in the crypto economy.