• Coinbase earns interest from USDC, which makes up 35% of Maker’s collateral
  • Maker would earn up to $24 million in revenue from the investment

The very-centralized crypto exchange Coinbase has proposed an investment line with MakerDAO, the organization behind the largest decentralized stablecoin. 

It appears adversity truly does make strange bedfellows.

The proposal would move a third of the Circle stablecoin backing Maker’s dai stablecoin, an estimated $1.6 billion, to Coinbase Prime in exchange for 1.5% yield — or an estimated $24 million of MakerDAO revenue. The proposal comes as Coinbase stock has plummeted and Maker reckons with the regulatory risk created by its USDC holdings.

Maker making the most of its USDC

MakerDAO is the largest single USDC holder. 

The stablecoin makes up 35% of dai’s collateral, roughly $4.8 billion. The dollar-backed stablecoin allows Maker to invest in non-crypto assets, as with its recent $100 million credit line inked with Huntingdon Valley Bank. 

Maker’s leadership has been calling for the DAO to shift away from USDC since the token’s developer team blacklisted Ethereum addresses in response to US Tornado Cash sanctions. But the Maker community was sour on Circle — even before the Treasury got involved.

“In the last couple of years, Maker has been actively contemplating how to get the USDC off its balance sheet,” Greg Di Prisco, Maker’s former head of business development, told Blockworks. “Maker holds USDC and makes nothing.”

The Coinbase proposal is being pitched as a way to get a return on the DAO’s dead weight USDC holdings. And while Coinbase does not follow Maker’s decentralized principles, the DAO’s leadership sees the centralized exchange as a pragmatic business partner.

“In an ideal world I would say we are completely crypto collateral backed because we get maximum decentralization. This is impossible in my view though,” Sam MacPherson, an engineer at Maker, told Blockworks. “There’s just not enough demand for loans against ETH [and other cryptocurrencies].”

Even Rune Christensen, MakerDAO’s co-founder who has led the charge calling for Dai to move its backing to Ethereum, voiced support for the initiative, writing under Coinbase’s forum post, “from a regulatory/legal/seizure risk perspective, this proposal changes nothing – it’s no different than holding USDC.”

Coinbase keeps a customer

The proposal would keep Maker as a customer for Coinbase, which co-founded USDC in 2018. The company earns interest from Circle on its USDC holdings, which totaled $360 million in June, per Coinbase’s SEC filings.

Coinbase is making its pitch weeks after Christensen threatened to “yolo” Maker’s USDC holdings into ether following the Tornado Cash sanctions.

“Coinbase is now saying, ‘Hey, so, you don’t leave USDC, we’ll give you 1.6% to stay,’” Di Prisco said.

Coinbase has endured a rough year amid the crypto market downturn. The company’s revenue and active users shrunk between the first and second quarters, and Coinbase’s stock price has fallen nearly 75% since the start of 2022. 

The exchange is also the subject of multiple lawsuits regarding its listing of digital assets the SEC has recently deemed securities.

Coinbase will hope for a stroke of positive news when its proposal is put to a vote on Maker’s governance portal.

Coinbase declined to comment.


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  • Blockworks
    Editorial Intern
    Jack Kubinec is an intern with the Blockworks editorial team. He is a rising senior at Cornell University where he has written for the Daily Sun and serves as Editor in Chief of Cornell Claritas. Contact Jack at [email protected]