MakerDAO (MKR) Rejects Proposal to Invest Up to $500M in Bonds, Votes on Increasing DAI Rewards

• MakerDAO voted against the proposal by CoinShares to invest $100-$500 million of its reserve denominated in USDC in corporate debt securities and government-backed bonds.
• Almost 73% voted against the proposal, 13.84% voted in favor, and 13.73% abstained.
• MakerDAO is also currently voting on increasing the reward rate for its decentralized stablecoin DAI. 68% have so far voted in favor of bumping the rate from the current 0.01% to 1%.

One of the largest decentralized crypto lenders, MakerDAO (MKR), has rejected the proposal put up by crypto investment firm CoinShares to invest up to $500 million of its USDC reserve in corporate debt securities and government-backed bonds.

Almost 73% of all voters voted against the proposal that offered to invest from $100 to $500 million in traditional financial assets with a variable APY above the SOFR interest rate, which was 3.01% as of October 26. 13.84% voted in favor and 13.73% abstained.

MakerDAO has already invested hundreds of millions of dollars of its $7.7 billion Peg Stability Module (PSM) reserve in traditional instruments in an attempt to generate more revenue. In October, the DAO voted in favor of investing $500 million in short-term US treasuries and corporate bonds with an expected 4.5% to 6% annual yield.

Less than a month later, MakerDAO voted in favor of moving $1.6 billion of its reserve denominated in USDC to Coinbase Prime, a custody program that will allow the protocol to earn 1.5% of additional yield.

MakerDAO is also currently voting on increasing the annual reward for its flagship stablecoin DAI to up to 1% from the current 0.01%. So far, almost 68% have voted to increase the rate to 1%. 32% are in favor of increasing it to 0.5%. The voting ends on December 1.

MakerDAO’s decision to increase the reward for DAI comes amid a weakening crypto lending environment. Multiple centralized crypto lenders like Celsius, Voyager, and BlockFi have declared bankruptcies this year, with Genesis also being rumored to be insolvent.

However, yields on decentralized crypto lending platforms have also plummeted. For example, yields on USDC are just above 1%. This is in stark contrast to current yields in traditional markets, with U.S. Treasury bonds, one of the least risky assets, yielding about 4%.

On the Flipside

• It’s unclear why MakerDAO has voted against the CoinShares proposal. The decision might have something to do with the recent turmoil in the crypto lending market.

Why You Should Care

Maker is one of the largest decentralized crypto lending and borrowing platforms in the market. Its survival and prosperity are important to the decentralized finance ecosystem.

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