The decentralized finance (DeFi) lending protocol MakerDAO’s community has voted to drop the $500 million worth of USDP stablecoin from its reserves, a significant blow to the Pax Dollar (USDP) as it held half of the token supply.
The MakerDAO treasury, issuer of the $5 billion DAI stablecoin and governing body of Maker, one of the largest lending protocols in DeFi, will now remove all the 500 USDP tokens from its reserves and invest its vast reserves in yield-generating strategies. These include Gemini, which pays an incentive to MakerDAO for holding its stablecoin, the GUSD, and a 2.6% yield on the $500 million of USDC it holds from Coinbase Prime.
This move is significant for Paxos, as New York state regulators forced it to halt minting Binance USD (BUSD) stablecoin back in February. The market cap of the BUSD stablecoin has since plummeted from $16 billion to $5 billion according to data from Coingecko.
The MakerDAO community argued that USDP did not accrue any revenue for MakerDAO, something that hurt its capital efficiency as it plans to increase the rewards rate for DAI savings.
