MakerDAO Will Invest $500M Into Minimal Risk Bonds

MakerDAO will invest $500M into minimal risk bonds and aims to generate yield with the DAI stablecoin via other traditional investments so let’s read more today in our latest cryptocurrency news.

MakerDAO is voting on a proposal aimed at helping weather the bear market and to utilize the untapped reserves by investing 500 million DAI stablecoins in US treasuries and bonds. After a straw poll in governance “Signal Request,” the decentralized autonomous organization members have to decide whether the Dorman DAI will go into short-term treasuries or split 80% into the treasuries as well as 20% into corporate bonds.

The Maker Governance votes to determine how to allocate 500 million DAI between different investment strategies.

This allocation poll is a result of the passage of MIP65: Monetalis Clydesdale: Liquid Bond Strategy & Execution.

A recap on how it would work.

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— Maker (@MakerDAO) June 27, 2022

MakerDAO is the governing body of the Maker protocol that issues US-dollar pegged DAI stablecoin in exchange for the user deposits of ETH, WBTC, and 30 other cryptocurrencies. The proposal represents a huge step for MakerDAO as it signals intent to go beyond the crypto realm and to earn yield from traditional investments with DAI. MakerDAO allows participants to vote on proposals by staking MRK and so far, the option to split the DAI between these treasuries and bonds has 99.3% Maker token support with 12 voters. The governance participation at Maker is now at its lowest level in 2022 with 169,196 MKR tokens staked.

The poll ends on June 30 and will leave a short amount of time for the voters to pick a side, reject or abstain from the options. Once the option is chosen, the EU wholesale lender Monetalis will provide MakerDAO with access to the financial instruments it wants and the CEO Allan Pedersen issued the Signal Request in the forum with options that his company can provide the DAO. The company has a goal of transitioning to low carbon resource efficiency. The DAO’s decision to invest in a large number of funds is based on recommendations by a few members who think that deploying the unused funds can help boost the protocol bottom line with no risk.

The member of the MAkerDAO Strategic Finance Core Unit Sebastien Derivaux posited in an assessment of the allocation’s feasibility that the amount in question seems high and can be a safe choice for the DAO:

“An investment of 500M DAI in this context, that is expected to remain liquid and low volatility, is therefore not a significant risk for the DAI peg nor the solvency of MakerDAO.”

Derivaux suggested that these two options being voted on were the best of the five that were up for debate so, despite the landmark move for Maker, MKR is down 1.6% in the past day.