MakerDAO DeFi Platform Dips Into TradFi With $500M Investment in Bonds and Treasuries

7 October 2022, 04:50 GMT+0000
Updated by Kyle Baird
7 October 2022, 04:50 GMT+0000
In Brief
  • The move aims to diversify MakerDAO's portfolio.
  • It is part of a bigger 'Endgame Plan.'
  • MKR has made 30% over the past two weeks.
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Decentralized finance pioneer MakerDAO will be converting as much as $500 million worth of its DAI stablecoin to use for investing in treasuries and bonds.

The move was executed by Maker Governance on Oct. 6 following a vote to diversify the protocol’s portfolio. The funds will be channeled into short-term US treasury bonds and investment-grade corporate bonds, traditionally safe havens in times of economic turmoil.

According to MakerDAO, the allocation of DAI will “promote the usability of digital assets in the traditional space, extending DAI’s influence beyond crypto.”

MakerDAO Endgame Plan

An initial vote took place in June and the first deployment of $1 million has been completed by DeFi asset advisor Monetalis. The investment will be split up with 80% going into short-term treasuries and 20% in corporate bonds.

Treasury bills are short-term U.S. government securities sold at a discount from their face value, with maturities ranging from a few days to one year. Corporate bonds are debt securities issued by corporations and sold to investors.

Nadia Alvarez, head of MakerGrowth, said that “the 80-20 split between treasuries and bonds remained the favored approach during the voting process. This showcases the opportunity associated with the move, and seeing such adamant support from the community is very exciting.”

Asset management firm Sygnum in collaboration with BlackRock Switzerland will provide a fiat off-ramp to convert 250 million DAI into USD, which will then be diversified into traditional assets.

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The move is part of MakerDAO’s Endgame Plan, the first phase of which involves increasing exposure to real-world assets in order to accumulate more ETH.

As reported by Be[In]Crypto, MakerDAO has a long-term strategy to make the protocol more resilient and decentralized, with DAI as a free-floating asset that is not pegged to USD.

DAI is the fourth largest stablecoin and the only truly decentralized one out of the market leaders. It has a circulating supply of 6.3 billion, giving it a stablecoin market share of 4.2%.

MKR Price Outlook

Maker’s native token has remained flat on the day, trading at around $840 at the time of writing. MKR has had a solid past two weeks, posting a gain of almost 30%, while most other tokens remain rangebound.

It has not escaped the bear market, though, and its MKR is token currently trading down 87% from its May 2021 all-time high of $6,292, according to CoinGecko.

Disclaimer

The information provided in independent research represents the author's view and does not constitute investment, trading, or financial advice. BeinCrypto doesn’t recommend buying, selling, trading, holding, or investing in any cryptocurrencies