MakerDAO To Deploy $500M In Treasuries And Corporate Bonds

The largest DeFi lender will soon invest up to $500M in USDC into U.S. Treasuries and corporate bonds.

A $1M test transaction has already been initiated with the full amount to follow shortly. MakerDAO aims to increase the productivity of USDC, the largest asset on Maker’s balance sheet, according to a February forum post which preceded a governance vote in May.

Maker is the largest DeFi protocol with $7.6B in total value locked (TVL), according to The Defiant Terminal.

The USDC will come from what’s called the peg stability module (PSM), which allows users to swap U.S. dollar-pegged stablecoins like USDC for DAI, Maker’s stablecoin. The bond portfolio will be managed by Monetalis, a DeFi asset manager.

Regulatory Concerns

The move to allocate up to $500M towards traditional assets comes at a time when Rune Christensen has been pushing against making further inroads into real-world assets like corporate bonds.

In response to the Tornado Cash sanctions, the Maker founder wrote on Maker’s forums that the regulatory environment had turned increasingly divisive. “Either you’re [a] fully compliant, regulated bank, or you’re a terrorist,” Christensen wrote.

The vote to move assets into traditional bonds continues a trend of third parties looking to partner with Maker — in late September, Gemini, the crypto exchange founded by the Winklevoss twins, proposed to pay Maker 1.25% on deposits of the exchange’s GUSD stablecoin.

Coinbase has also offered to pay Maker 1.5% if the DAO deposits $1.6B of USDC from its PSM into Prime, Coinbase’s institutional offering.

Chris Blec, a Maker governance delegate, is strongly against the proposed partnerships. “DAI is under severe threat of being captured by corporations,” he wrote on Twitter, citing the moves by Coinbase, Gemini, and Monetalis as examples.

The protocol’s MKR token has outperformed over the last month, rising 19% to $865 while Bitcoin has remained flat and Ether has dropped 19%.