MakerDAO – the decentralized autonomous organization behind the stablecoin DAI spent $500 million investing in US bonds.
MakerDAO is consider allocated an additional $750 million in short-term bills and investment-grade corporate bonds, in order to take advantage of favorable interest rates.
MakerDAO is reviewing a proposal to extend its existing US treasury bond investments from $500 million to $1.25 billion. pic.twitter.com/DZj72oTJvP
— Maker (@MakerDAO) March 7, 2023
If approved, this would be the organization’s second rollout of capital into the traditional financial sector, in addition to initial allocation of $500 million (October 2022), bringing the total investment to $ 1.25 billion. As Cointelegraph reported, the DAO previously partnered with private lender Monetalis, serving as a solid legal and asset advisor to Maker in its exposure to traditional assets.
The new proposal would require the DAO to complete its investment in US Treasuries within six months using a Bond Laddering strategy, reinvesting every two weeks. In a nutshell, this is a fixed-income portfolio management model in which multiple bonds are purchased, each with different maturities, to react quickly to fluctuations in interest rates. . This strategy gives Maker the flexibility to switch to other investment models if needed.
MakerDAO founded DAI in 2017 as a decentralized stablecoin backed by Ethereum (ETH) and other crypto collateral. Over the last year, MakerDAO has switched to a strategy of diversifying its treasury into real-world assets (RWAs).
The first $500 million allocation to US bonds was aimed at stabilizing DAI at that time. However, stablecoins in general have been affected since the collapse of the Terra ecosystem UST in May 2022.
Allan Pederson, CEO of asset management unit DeFi Monetails, said:
“After reviewing various highly liquid money market options, we found that the simple solution was to raise the number of US Treasuries for about 6 months with maturities of two weeks at a time. times is a powerful, flexible and efficient solution for Maker.”
Mr. Allan also noted that the above strategy will take advantage of the low cost, tax efficiency and inherent liquidity of treasuries to maturity.
On the other hand, Maker hopes to soon see a BlockTower counterpart adopt a similar attribution structure. Monetails has offered to make this allocation immediately to take advantage of current interest rates. Song Monetails will not act as an asset manager or investment advisor for MakerDAO this time around. Instead, the investment strategy will be handled by Sygnum Bank.
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