Lending protocol and stablecoin issuer MakerDAO handed a proposal on March 16 to extend its portfolio holdings of United States Treasury bonds by 150%, from $500 million to $1.25 billion.
The proposal goals to extend the protocol’s publicity to real-world property and “high-quality bonds,” following its Dai (DAI) stablecoin shedding its $1 peg throughout market volatility on March 11. The $750 million debt ceiling hike was authorised by 77% of Maker’s delegates. A consultant of MakerDAO advised Cointelegraph:
“Underneath this new deployment, MakerDAO would use $750 million of USDC within the PSM to buy extra US Treasury bonds, thus diversifying its liquid property that again DAI.”
The bonds can be bought with equal maturities, biweekly and over a six-month interval, totaling 12 slots of $62.5 million every. Underneath the technique, MakerDAO stated it expects to ship a web annualized yield of 4.6% to 4.5% after custody. Maker’s income stream is also boosted by buying and selling prices, the proposal famous.
The proposal would enable Maker “to make the most of the present yield surroundings, and generate additional income on Maker’s PSM Property, in a versatile, liquid, method,” it learn. Federal Reserve knowledge exhibits that Treasury’s yields for 10-year fixed maturity had been at 3.64% on March 14.
The transfer is an extension of a present $500 million U.S. Treasury allocation managed by decentralized finance (DeFi) asset adviser Monetalis Clydesdale since October 2022. “As of January 2023, this funding technique has introduced ~$2.1 million in lifetime charges,” MakerDAO claimed.
Contributors within the governance discussion board, nonetheless, stated that “Maker has not but obtained any cost from the primary half billion DAI” from Monetalis. Delegates additionally complained that questions in Maker’s Discord and governance discussion board weren’t answered promptly, thus not providing sufficient time to investigate the proposal.
On March 11, the collapse of Silicon Valley Financial institution unfold panic throughout markets and led to the depeg of a number of stablecoins, together with USD Coin (USDC) and Dai. In a March 13 Twitter thread concerning the volatility, MakerDAO famous that its group was engaged on proposals to modify its stablecoin publicity to cash market investments, reminiscent of U.S. Treasurys, “with the aim of diversifying DAI’s liquid collateral.”
