$500 million of the funds currently collateralizing the Dai stablecoin will be moved to US Treasuries and corporate bonds in an effort to provide the additional low-risk return of the protocol.
MakerDAO, the governing body of the Maker Protocol, has taken the first step in its plan to sell $500 million of its Dai stablecoin.
ICD
to mark
$1.00
Safety reserves in short-term US Treasury bonds and corporate bonds.
The decentralized autonomous organization (DAO) voted on October 6 to approve a pilot transaction of 1 million dollars after an executive vote by Maker.
MKR
to mark
$830
tokenholders, with the rest of the funds to be implemented soon after community confirmation.
A majority, 80% of the $500 million, will be invested in short-term US Treasuries, with $160 million allocated to BlackRock’s iShares US Treasury ETF (ETF).
The final $100 million will be allocated to investment grade corporate bonds provided by investment management firm Baillie Gifford.
The asset allocation was determined by MKR holders, with 68,250 MKR representing 57.67% of the total group of voters who opted for the 80-20 split.
MakerDAO pursued the plan as a way to diversify the ownership currently collateralizing DAI, while allowing DAO to deploy unused funds and provide additional performance to the protocol without significant risk to DAI’s peg or MakerDAO’s creditworthiness.
DAI is the stablecoin used by MakerDAO to allow the decentralized finance (DeFi) protocol to lend money to users, so that the refundable amount can avoid being subject to the volatility often seen in crypto markets.
The majority of DAI’s $9 billion security fund currently consists of USD Coin
USDC
to mark
$1.00
, a stablecoin backed by cash and short-term US Treasuries. In addition, DAI is currently overcollateralized in a proportion of 134.87%.
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While fixed income investments offer low returns, they are traditionally considered a “safe haven” for conventional investors during bear markets because of their steady income stream and also because fixed income investors are paid back. before the shareholders in case of bankruptcy.
The October 6 announcement pushes DAI in a different direction than recent comments by MakerDAO co-founder Rune Christensen on August 27, who recommended DAI decoupling from USDC and about a truly decentralized cryptocurrency amid fears of regulatory crackdowns.
