MakerDAO Has Approved Proposal To Raise US Treasury Investment Cap

Key Points:

• MakerDAO’s proposal to increase the US Treasury bond investment limit to $750 million has been approved.
• The proposal received 77% of votes to help diversify DAI-backed liquid assets.
• This is a step towards making the stablecoin DAI more stable.

According to the official announcement, MakerDAO’s proposal to increase the investment limit of US Treasury bonds from $500 million to $1.25 billion has been approved.

The proposal, which received 77% of the vote, would see MakerDAO use $750 million of USDC in PSM to buy more US Treasury bonds, thereby diversifying the liquid assets backing DAI.

The bonds, which mature every two weeks, will be purchased a total of 12 times for $62.5 million over a six-month period. According to the proposal, the strategy is expected to yield a net annualized return of 4.6% to 4.5% after deducting custody and expected transaction costs.

The proposal intends to improve the protocol’s exposure to real-world assets and high-quality bonds. Previously, the DAO collaborated with private lender Monetalis, acting as a strong legal and asset adviser to Maker in its exposure to conventional assets.

DAI was created in 2017 by MakerDAO as a decentralized stablecoin backed by Ethereum (ETH) and other crypto collateral. MakerDAO has turned to a policy of diversifying its treasury into real-world assets during the previous year (RWAs).

On March 11, DAI lost its $1 peg due to market volatility. Maker’s boost in treasury reserves will make DAI “more stable.”

According to the DAO, the proposal will enable Maker to take advantage of the present yield environment and produce more money on Maker’s PSM Assets in a flexible and liquid way.

Earlier regarding the collapse of Silicon Valley Bank, MakerDAO urgently changed its proposals in response to the situation.

Maker, on the other hand, wants to see a BlockTower rival adopt a similar attribution system shortly. Monetails has offered to make this allocation right away in order to capitalize on current interest rates. This time, Song Monetails will not operate as an asset manager or financial adviser for MakerDAO. Sygnum Bank will manage the investment strategy instead.

MakerDAO has temporarily disabled Compound v2 D3M and Aave v2 D3M to avoid possible insolvencies.

MakerDAO will also cut the gap parameter for the USDC PSM, which has been Maker’s key liquidity source, from 950 million DAI to 250 million DAI.

DISCLAIMER: The Information on this website is provided as general market commentary and does not constitute investment advice. We encourage you to do your own research before investing.

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