MakerDAO Approves Preliminary Proposal To Park $100 Million USDC In Yearn Finance Vault

Summary:

• The MakerDAO proposal to earn yield from a Yearn Finance vault was backed by the governance community.
• Yearn Finance’s special investment vehicle or vault has a cap of $100 million.
• The USD Coin treasury allocation from Dai’s developer will earn a 2% annual yield if approved by an executive vote.

The MakerDAO governance community backed a proposal to deploy $100 million of Circle’s USD Coin (USDC) in a Yearn Finance yield-generating account called a “vault”. The proposal was submitted on January 9, 2023 as the DAI stablecoin operator looks to diversify its treasury allocations and earn yield. 

MIP92 which stands for Maker Improvement Proposal suggested investing $100 million USDC in Yearn Finance’s vault account to earn around 2% yield annually. This means that the protocol stands to make $2 million every year on its YearnFi investment. 

Yearn Finance is a yield aggregator developed by the acclaimed “Godfather of DeFi”, Andre Cronje. The decentralized finance protocol runs atop Ethereum’s blockchain and allows users to deposit assets in the service in exchange for yield or interest. 

A total of 68 votes were cast with 95,666.284 of Maker’s native token MKR used to back the decisions. 71.56% of the votes supported the proposal to deploy USDC in Yearn Finance while 28.44% stood against the idea. 

The next step for MIP92 involves an executive vote before the proposal is either binned or implemented in Maker’s protocol.

MakerDAO, Other DeFi Protocols Pick USDC For Investments

This is not MakerDAO’s first time depositing USDC in DeFi yield-generating platforms. Indeed, the DAI issuer has previous treasury allocations in protocols like Aave and Compound. The project also reviewed a Coinbase proposal to park $1.6 billion USDC to earn 1.5% annual yield back in September 2022.

Ethereum Name Service (ENS) is considering a proposal to swap 10,000 Ether (ETH) for 13 million worth of USDC in a Gnosis auction. The ENS community member opined that bolstering the platform’s USDC reserves will secure operational liquidity enough for 24 months. 

Despite being the second-largest stablecoin in the crypto market, protocols seemingly tilt towards Circle’s dollar-backed token when making DeFi bets.