MakerDAO To Invest $500M in U.S Treasury and Corporate Bonds

• It started with a $1 million pilot transaction, and the rest will follow shortly.
• MakerDAO’s native stablecoin, DAI, will be converted to US dollars.

In a Thursday announcement, MakerDAO, the biggest DeFi lending protocol in the world, said it will invest $500 million in US Treasury bonds and investment-grade corporate bonds.

Members of the MakerDAO community voted for many months to accept the proposal, which involves investing $400 million in US government bonds and $100 million in corporate bonds from the organization’s asset reserves. It all started with a $1 million pilot transaction, and the rest will follow shortly.

According to MakerDAO Growth director Nadia Alvarez:

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

Diversifying Collateralized Funds

MakerDAO’s native stablecoin, DAI, will be converted to US dollars in a $500 million transaction that will be supervised by DeFi asset adviser Monetalis. Half of the money will be converted by digital asset bank Sygnum, while the other half will be managed by investment company Baillie Gifford. Investment grade corporate bonds and U.S government securities will be purchased using the proceeds.

Motivated by a desire to diversify the billions of dollars in collateralizing funds now supporting DAI, as well as to develop methods to get those funds to produce profits, the investment seems to have been made. MakerDAO has a $9 billion DAI collateral pool, the most bulk of which is locked up in USDC, a stablecoin that, by definition, provides no return on investment.

The organization said:

“The generation of yield on MakerDAO’s asset reserves allows for the enhancement of the protocol’s capabilities and the ability to secure capital investment.” 

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