MakerDAO, the governing body behind the largest decentralized finance (DeFi) lending protocol, Maker, has announced it’s going forward with the plan to invest $500 million in short-term US treasuries and corporate bonds.
The months-long community vote ended with the outcome of investing $400 million in US treasuries and $100 million in corporate bonds. A pilot investment of $1 million in bonds has already been transferred, and the rest will follow soon.
Maker Governance executed the first DAO balance sheet investment in high-quality bonds.
— Maker (@MakerDAO) October 6, 2022
MIP65: Monetalis Clydesdale will activate a Maker Vault for the purpose of investing PSM’s USDC in liquid bond strategies with a debt ceiling of 500 million DAI. pic.twitter.com/LlpBUkYXxE
European DeFi asset advisor Monetalis will be in charge of overseeing the conversion of $500 million worth of MakerDAO’s native stablecoin, DAI, into US dollars. Digital asset bank Sygnum will convert one half, and Baillie Gifford, a UK-based investment management firm, the other.
MakerDAO’s plan to utilize untapped reserves can be seen as a way to diversify its portfolio and generate additional yield since the majority of MakerDAO’s $9 billion DAI collateral is in USDC, a stablecoin that gives no yield.
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However, investing in US treasuries and bonds can come off as a bit of a surprise. In August, MakerDAO’s founder Rune Christensen proposed to divest DAI from USDC, citing Circle’s, the creator of USDC, cooperation with the US government in the Tornado Cash story.
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MKR, MakerDAO’s governance token, is currently trading 3% higher at $853.35, according to CoinMarketCap. It’s down 87% from its all-time high of $6,339. DAI is the fourth largest stablecoin in the market.
On the Flipside
- $500 million is only 5% of the total $9 billion DAI collateral.
Why You Should Care
MakerDAO is the largest DeFi lending protocol. While the protocol’s ethos is maximum decentralization, the plan to invest in US treasuries and corporate bonds raises questions about the project’s future.
Read more about how Maker works:
An Overview of Uniglo (GLO) Vs. LidoDAO (LDO) and Maker (MKR)
Read Circle CEO’s thoughts after the Tornado Cash incident:
Circle CEO Jeremy Allaire Calls for Legal Framework and Policies After Tornado Cash Fiasco
