Crypto exchange Coinbase is looking to transfer MakerDAO’s $1.6 billion (roughly Rs. 12,780 crore) in return for the latter’s revenue of roughly $24 million (roughly Rs. 190 crore). The $1.6 billion constitutes 33 percent of MakerDAO’s ‘Peg Stability Module (PSM)’ and Coinbase is asking Maker to transfer this to its Prime Custody account. In recent times, Coinbase has found itself struggling with financial losses and operational difficulties. So the company is trying different ways to bring back the business.
MakerDAO is the creator of the Ethereum-based Dai stablecoin. The platform allows depositors to earn interest on DAI deposited with the maker bank. Its PSM allows users to exchange a given type of collateral directly for DAI instead of borrowing from DAI.
A maker’s current PSM allocation can be invested to check whether it is “grossly underinvested”. If this turns out to be true, it will reduce the attractiveness of DAI as a stablecoin, a Report Illustrated by The Block.
If Coinbase’s proposal passes, Maker will not have to pay Coinbase any fees on its PSM deposit, enabling free mint, burn, withdrawal and settlement of its allocated USDC through Coinbase Prime.
According to The Block, the proposal is a strategic move that will generate revenue on idle assets on MakerDAO’s balance sheet.
Coinbase, on the other hand, is using new business strategies to help its business regain operational stability.
In August, for example, Coinbase announced the introduction of a new liquid staking token called Coinbase Wrapped Staking Ether, or “cbETH.” cbETH is an ERC-20 utility token and will be available to customers who share Ether on Coinbase.
The development came in the same month that Coinbase Global reported a bigger-than-expected quarterly loss as investors worried about losses in risky assets this year steered away from trading in cryptocurrencies, sending its shares down 6 percent after the bell on Tuesday.
Trading volume at cryptocurrency exchanges more than halved to $217 billion (roughly Rs. 17,25,130 crore) in the second quarter, with retail participation falling by 68 percent and institutional trading by 46 percent.