Stablecoin issuer and lending protocol MakerDAO approved an emergency proposal on March 15 that increases its portfolio of United States Treasury bonds by 150%, from $500 million to $1.25 billion, according to an on-governance sample. maker’s chain.
The proposal aims to increase the protocol’s exposure to real-world assets and “high-quality bonds,” after its Dai (DAI) stablecoin lost its $1 peg under events of market volatility on March 11. . The $750 million raise was approved by 89% of Maker delegates. According to the protocol
“Under this new deployment, MakerDAO would use USDC 750 million in the PSM to purchase more US Treasuries, thereby diversifying its liquid assets backing DAI.”
The bonds will be purchased with equal maturities, biweekly and over a period of 6 months, for a total of 12 lots of USD 62.5 million each. According to this strategy, MakerDAO expects to earn an annualized net return of 4.6% to 4.5% post-custody. Maker’s revenue stream could also be boosted by trading costs, the protocol noted.
The proposal would allow Maker to “take advantage of the current yield environment, and generate more revenue on Maker’s PSM Assets, in a flexible and liquid manner,” the protocol said. Federal Reserve data shows that the 10-year constant-maturity Treasury yield stood at 3.64% on March 14.
The move is an expansion of a current $500 million US Treasury allocation managed by DeFi asset adviser Monetalis Clysdesdale since October last year. “As of January 2023, this investment strategy has delivered ~$2.1 million in lifetime commissions,” states MakerDAO.
Participants in the governance forum, however, noted that “Maker has yet to receive any payment of the first 500 million DAI” from Monetalis. Delegates also complained that questions on the Maker governance and Discord forum were not answered promptly, leaving insufficient time to discuss the proposal.
On March 11, the bankruptcy of Silicon Valley Bank sowed panic in the markets and It caused many stablecoins to depreciate, including USD Coin (USDC) and DAI. in a thread of tweets Commenting on volatility developments, MakerDAO noted that its community was working on proposals to shift its stablecoin exposure to money market investments, such as US Treasuries, “for the purpose of diversifying liquid DAI collateral.” .
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