MakerDAO to Move $500 Million Into U.S. Treasuries and Bonds

Decentralized stablecoin protocol MakerDAO has pledged to convert $500 million of its DAI reserves into US bonds and treasuries.

This marks the decentralized autonomous organization’s (DAO) first investment in high-quality public debt.

• As MakerDAO explained on Twitter, MKR holders voted to deploy USDC from its peg stability module into liquid bonds, using its recently created Maker Vault of real-world assets.
• The allocation will consist of 20% investment grade corporate bonds and 80% US Treasuries.
• So far, only 1 million DAI has been deployed in escrow, with the rest requiring further executive votes to meet the newly established 500 million DAI debt ceiling.
• The move comes amid a broader effort among stablecoin issuers to demonstrate that their assets are backed by reliable reserves.
• Tether, the world’s largest stablecoin issuer, has repeatedly reduced its exposure to commercial paper this year. His last update suggested that its commercial paper is down to just $50 million, while US Treasuries make up 58.1% of its $68 billion portfolio.
• Similarly, Circle and Paxos, custodians of USDC and BUSD respectively, revealed in July that its reserves are backed only by US government cash or debt.
• MakerDAO has historically operated differently. In an effort to remain decentralized, its reserves have been backed by a basket of various cryptocurrencies. These have included other stablecoins such as USDC as well as volatile cryptocurrencies such as Bitcoin and Ethereum.
• However, the DAO has been trying to become less dependent on USDC after Circle revealed its censorious hand in August: freezing USDC locked inside the TornadoCash privacy protocol.
• At that time, the founder of MakerDAO proposed completely moving USDC reserves from DAO to Ethereum.