- The MakerDAO community voted to scrap $500 million worth of Pax Dollar (USDP) stablecoins from the reserve.
- Maker’s Treasury holds about half of USDP’s $1 billion supply.
- New York regulators forced Paxos to stop minting the Binance USD (BUSD) stablecoin in February.
The community of decentralized finance (DeFi) lending protocol MakerDAO voted Remove $500 million worth of USDP stablecoins from reserves. This is a big blow for the Pax Dollar (USDP) stablecoin, as the lending protocol accounted for half of the USDP token supply.
There is a total supply of USDP tokens of $1 billion, and after voting, Makers will remove all 500 USDP tokens from their reserves.
After USDP demise, MakerDAO, issuer of $5 billion DAI stablecoin and governing body of Maker, one of DeFi’s largest lending protocols, invests its massive reserves in yield-generating strategies will increase your income.
Examples of yield-generating strategies in which MakerDAO invests include Gemini, which pays MakerDAO incentives for holding GUSD, a stablecoin. MakerDAO is also poised to capture a 2.6% yield on its $500 million USDC holdings from Coinbase Prime.
Impact on the struggling Paxos island
In February, Paxos was forced to stop minting the Binance USD (BUSD) stablecoin by New York state regulators. Since then, the BUSD stablecoin’s market capitalization has plummeted from $16 billion to $5 billion, according to Coingecko data.
Although, pax dollar indicator Though largely unaffected, MakerDAO’s move had a significant impact on Paxos as a company.
The MakerDAO community argued that the USDP was not making a return to MakerDAO and plans to increase the rate of return on DAI savings hurting capital efficiency.