Decentralized finance (DeFi) lending platform and stablecoin issuer MakerDAO is on the brink of potentially dropping a significant portion of Gemini‘s GUSD stablecoin from its reserves. A recent proposal submitted to the community aims to decrease the maximum amount of GUSD held in Maker’s DAI stablecoin reserve, known as the Peg Stability Module (PSM), from $500 million to $110 million. With less than a day before the voting closes, approximately 94% of participants seem to favor a reduction in GUSD holdings.
It’s important to highlight that a similar proposal in January saw a last-minute surge of votes supporting the retention of GUSD, resulting in a close 50.85% majority. This vote carries significant weight for the future of GUSD, as Maker currently holds around 88% of the stablecoin’s $568 million in circulation. By keeping cryptocurrencies such as Circle’s USDC and GUSD in reserve and investing in real-world assets like government bonds, Maker supports the $4.5 billion DAI value.
Gemini, the crypto exchange operated by Tyler and Cameron Winklevoss and the issuer of GUSD, offers a 2% annual reward to MakerDAO for using their token as a reserve asset. The proposal, however, suggests that the platform can benefit from better revenue opportunities, such as investing in short-term U.S. Treasuries that currently yield approximately 5%.
On the one hand, reducing GUSD exposure might lead to superior capital efficiency, enabling the allocation of funds to higher revenue-generating opportunities. This could potentially result in an increase in the value of DAI and better returns for MakerDAO and its users. The community supporting the reduction may see it as a strategic decision to maximize profits and reduce dependency on a single stablecoin.
Conversely, those who oppose the proposal may argue that GUSD has played a crucial role in maintaining the DAI peg by providing a reliable and regulated stablecoin asset. Reducing exposure to GUSD could lead to potential instability in the DAI value and erode trust in the MakerDAO ecosystem. Some may view this move as a risky departure from the tried-and-tested methods that have supported MakerDAO until now.
As the voting nears its end, the MakerDAO community must weigh the potential advantages of better capital efficiency and enhanced revenue opportunities against the possible risks associated with reduced exposure to GUSD. The outcome of this vote will not only determine the future relationship between MakerDAO and Gemini’s GUSD but may also set a precedent for upcoming decisions involving stablecoin investments and DeFi.
Source: Coindesk
