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MakerDAO Mulls Expanding US Treasury Bond Investments to $1.25B

2 mins
Updated by Kyle Baird
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In Brief

  • MakerDAO is considering expanding its United States Treasury bond investments to $1.25 billion.
  • The allocation was previously $500 million, with $400 million in Treasury bonds and $100 million in corporate bonds.
  • The DeFi giant has made multiple headlines in recent times, including for a proposal that would allow borrowing DAI with MKR tokens.
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MakerDAO is considering raising the ceiling of its Treasury bond investments to $1.25 billion. A proposal was listed on March 6, stating that it would help take advantage of the current yield environment.

DeFi powerhouse MakerDAO is mulling whether to expand its United States Treasury bond investments to $1.25 billion. A new proposal was listed on March 6, calling for raising the ceiling from $500 million. The $750 million increase will see deployment through a 6-month U.S. Treasury ladder strategy with bi-weekly roll-over.

A decision to allocate $500 million to Treasury funds was first announced in June 2022, setting off headlines. This time, the motivation for this was stated as such,

“ [to] take advantage of the current yield environment, and generate further revenue on Maker’s PSM Assets, in a flexible, liquid, manner that can accommodate material adjustments and upgrades as may be required under prevailing, relevant Maker RWA related policies.”

At the time, it was noted that it could help Maker reduce counterparty and credit risk, which was necessary given the turmoil the market was experiencing. Maker is hoping to see this allocation take place as soon as possible so that it can “take immediate advantage of the current yield environment as much as it can.”

Maker’s Treasury Bond Investments Raise Eyebrows

Maker made tremendous headlines when it announced that it would allocate $500 million in Treasury bonds and corporate bonds. The DAO eventually decided to allocate $400 million to U.S. Treasury bonds and $100 million to corporate bonds.

There was some criticism of the decision, with detractors saying that it didn’t really conform to the spirit of decentralization. ShapeShift founder Erik Voorhees was among those that criticized the decision.

MakerDAO Takes Multiple Steps Forward

Maker has been marching on and remains one of the most powerful entities in the DeFi space. The MakerDAO community rejected a bid by Cogent Bank to borrow $100 million from its platform, with 73% voting against it. Interestingly, the community had approved a similar loan to another bank, the Huntingdon Valley Bank, bringing more traditional financial entities on board.

Last month, the MakerDAO community set aside 5 million DAI for a legal defense fund. It stated that the fund would cover aspects of legal defense that traditional insurance wouldn’t cover.

It also announced an Aave competitor called Spark Protocol last month. The latter will leverage DAI for liquidity and provide a lending product as its first offering. In other news, it recently sparked discussions for a proposal allowing DAI to borrow from MKR tokens.

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Rahul Nambiampurath
Rahul Nambiampurath's cryptocurrency journey first began in 2014 when he stumbled upon Satoshi's Bitcoin whitepaper. With a bachelor's degree in Commerce and an MBA in Finance from Sikkim Manipal University, he was among the few that first recognized the sheer untapped potential of decentralized technologies. Since then, he has helped DeFi platforms like Balancer and Sidus Heroes — a web3 metaverse — as well as CEXs like Bitso (Mexico's biggest) and Overbit to reach new heights with his...
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