One of France’s leading banks has approached the pioneer of the decentralized financial system, MakerDAO, with a proposal to offer bond tokens as collateral for a DAI stablecoin loan.
A landmark proposal titled “Security Token Refinancing” was presented to the Product Manager forums by the World Bank on October 1. This will be the first major collaboration between a traditional bank and the DeFi protocol and could open the door to a closer integration of the two. sectors.
Société Générale (SG) called it “the first experience at the crossroads between structured and open source initiatives.”
The bank offered to introduce “OFH” (bond de Financialment de l’habitat) security tokens, which, according to French law, are covered and backed by mortgages.
The funds will be used to provide a $20 million stablecoin loan from Maker DAI, which will be brokered by a number of legal entities and mature within six to nine months.
The Ethereum-based security token was issued in May 2020 with a nominal value of €40 million ($46.3 million) and a fixed interest rate of 0%. It matures in May 2025 and has a best AAA credit rating from Moody’s and Fitch rating agencies.
MakerDAO founder Ron Christensen said he had “no idea” about the proposal, adding that “this is one of many recent examples at Maker Governance that show how the organizational model, once established, is more scalable.”
Industry columnist DCInvestor commented on the potential impact of such agreements on Ethereum and its position as a global settlement group:
“Societe Generale, trying to make their network assets usable in Maker, and you wondering if Ethereum will become a global settlement, is happening now.”
SG stated that the loan will be a “trial use case” with the aim of “shaping and enhancing the experience in accordance with the French legal framework” and “improving profitable services and increasing the liquidity of digital bonds.”
SG Forge, a regulated subsidiary of the crypto bank, is running the offering based on the open source platform CAST (Security Token Compliant Architecture).
The legal framework of the agreement is complex because it must integrate a corporate finance organization with a decentralized management network. The block diagram provided by the bank describes the six separate units involved in the process. These include Societe Generale Forge, SG Bank itself, MakerDAO, DeFi Protocol Legal Representative, DIIS Group Security Agent and Offshore Exchange Agent.
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A member of the MakerDAO community commented under the pseudonym “PaperImperium” on the suggestion in the forum:
“Maker and SocGen-Forge are on the edge of financial history. To be alive for a while.”
The proposal is currently under discussion and a formal ruling vote will take place in the coming weeks.
This is not the first time Societe Generale has been involved in Ethereum-based security tokens. In April 2019, the SG Forge Bank division issued a €100 million bond as OFH’s security token on Ethereum.