Understanding the Vote
In a noteworthy decision, the members of MakerDAO have spoken loud and clear with a resounding 72.43% voting against a proposal from crypto investment giant CoinShares. This proposal aimed at investing a staggering sum of between $100 million and $500 million from the community’s funds into a mixed bag of corporate debt and government-backed securities for the sake of generating yield.
The Proposal Details
The proposal promised an attractive variable annual percentage yield (APY), supposedly surpassing the SOFR interest rate (currently 3.01% as of the end of October 2022) and payable in the MakerDAO community’s choice of currencies such as DAI, USDC, or USD. However, the community seemed to have reservations about such a risky foray into corporate bonds.
Community Voices
The sentiments echoed by a few community members shed light on the reasons behind the decision. Feedblack Loops LLC articulated a call for caution:
“Since governance has voted on excess USDC then available, going to just say no to proposals of this type moving forward until the house gets in order.”
They expressed optimism for a future reworking of the proposal but stressed the need for clarity. Meanwhile, another user, Llama, stated,
“We believe this proposal to be extremely beyond protocol risk tolerance.”
Clearly, the consensus favored prudence over potential promise.
A Necessary Pause Amid Turbulence
This decision comes on the heels of a tumultuous time for MakerDAO. Following the custodianship approval of $1.6 billion worth of USD Coin (USDC) with Coinbase Prime, expected to earn a 1.5% reward, MakerDAO now faces scrutiny over its financial health. In fact, a report highlighted a drastic revenue drop in Q3 2022 due to diminished loan demand coupled with a rise in expenses, prompting many to urge caution.
Future Considerations
The outcome of this vote leads to important questions for MakerDAO’s future. With the community’s finances needing more stability and transparency, time will tell how the governance will adapt its strategies moving forward. A more measured approach might be the ticket to regaining community trust in upcoming proposals.
