- Paxos claimed that Maker would earn an additional $29 million in revenue each year.
- In 2024, the maximum threshold would rise to $2 billion in USDP.
Paxos, a stablecoin issuer, considered paying MakerDAO a recurring charge for keeping up to $1.5 billion in Pax USD (USDP) stablecoin reserves. As per the proposal, to encourage the use of USDP within the Maker ecosystem and increase the USDP PSM Debt Ceiling to 1.5B USDP, Paxos will send MakerDAO monthly marketing charges worth 45% of the Effective Federal Funds Rate on the USDP in the PSM. In 2024, the maximum threshold would rise to $2 billion in USDP.
Extra $29 Million in Revenue
Paxos claimed that Maker would earn an additional $29 million in revenue each year. The proposal will be discussed by the MakerDAO community before being put to a vote. USDP is fully backed 1:1 by cash and debt instruments. That are officially assure by the credit of the United States Government. The USDP is limited to primary prudential regulation, and it may only legally be backed by cash and cash equivalents.
The approach is a part of MakerDAO’s simultaneous attempt to lessen its dependency on Circle’s USDC stablecoin. And improve the protocol’s income by investing in government bonds. And using other investment tactics to produce a steady yield on a $7 billion stockpile of digital assets in its reserve. The MakerDAO community agreed in November to raise the rewards rate for its DAI stablecoin to 1%. After a controversial vote in which the MakerDAO community finally settled to preserve Gemini USD (GUSD) stablecoin as part of a reserve asset for DAI. Then Paxos’ proposal was accepted.
50.85% of voters in a poll supported keeping the GUSD debt ceiling at $500 million in Maker’s Peg Stability Module (PSM), while 49.15% favoured lowering it to zero. Thus, GUSD will continue to serve as a reserve asset for Maker’s $5 billion DAI. Votes in favour of withdrawing GUSD from the PSM had the majority.
