MakerDAO plans to invest $500 million in "low-risk" treasuries and bonds

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MakerDAO plans to invest $500 million in “low-risk” treasuries and bonds

MakerDAO plans to invest $500 million in "low-risk" treasuries and bonds
Source: CoinTelegraph
1656499083 29 Jun / 10:38

MakerDAO is now voting on a plan to invest 500 million Dai (DAI) stablecoins in a combination of U.S. treasuries and bonds to withstand the bear market and use unutilized reserves.

Members of the decentralized autonomous organization (DAO) must now vote, based on a governance Signal Request straw poll, whether the dormant DAI should be invested wholly in short-term treasuries or 80 percent in treasuries and 20 percent in corporate bonds.

MakerDAO is the governing organization of the Maker system, which releases DAI stablecoins tied to the U.S. dollar in return for user deposits of Ether (ETH), Wrapped Bitcoin (wBTC), and approximately 30 other cryptocurrencies.

This idea signifies Maker DAO’s intention to go outside the crypto sphere and generate returns from “safe” traditional financial assets using its flagship DAI.

MakerDAO enables users to vote on ideas by staking their Maker tokens (MKR). The option to split the Dai between treasuries and bonds has 99.3 percent MKR token support, while just 12 voters have cast ballots. With 169,196 MKR tokens invested, governance involvement at Maker is now at its lowest level in 2022.

The poll closes on June 30 at midnight EDT, giving other voters little time to choose a side, abstain, or reject the alternatives.

After a selection, the European wholesale lender Monetalis will grant MakerDAO access to the desired financial instruments. Allan Pedersen, CEO of Monetalis, published the Signal Request on the forum, detailing the choices his company may offer the DAO.

The company’s objective is to transition to low-carbon resource efficiency, as defined by the United Nations.

The DAO’s choice to invest such a significant sum of money is based on the recommendations of several members who feel that deploying the leftover assets might assist increase the protocol’s profitability with low risk.

Sebastien Derivaux, a member of MakerDAO’s strategic finance core team, opined in a June 20 evaluation of the allocation’s viability that, despite the amount’s relatively high appearance, it should be a prudent decision 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 opined that the two choices now being voted on were the best of the five possibilities under consideration.

According to CoinGecko, despite Maker’s historic step, the MKR price has decreased by 1.6% during the previous twenty-four hours to $964.71.

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