MakerDAO to Invest $500M in U.S. Treasuries and Corporate Bonds

MakerDAO, the team behind the DAI stablecoin, has taken its first step in allocating $500 million worth of funds to the U.S. Treasury and corporate bonds, thereby diversifying its balance sheet. The allocated funds were stored in the custody of two investment companies.

MakerDAO to Diversify Balance Sheet

Monetalis, a digital asset advisor company, proposed to the MakerDAO community the idea of a $500 million exposure to traditional assets. The idea was bought by 72% of the members of the community. 

With the proposal being accepted, the community has approved a $1 million “pilot transfer,” stating that the rest of the funds will be underway. The community further stated that it would invest 80% of the funds in U.S. treasury bonds, while the remaining 20% will be allocated to corporate bonds.

Rajiv Sainani, MakerDAO Europe Growth Lead, spoke about the development, where he said:

“This portfolio diversification tangibly demonstrates the innovation and real-world benefits traditional assets are bringing to the DeFi-enabled finance revolution.”

Stablecoin issuers need to back their stablecoins to enable them to maintain their peg on their underlying assets or currency. In the case of MakerDAO, the DAI stablecoin, which is designed to be pegged to the U.S. dollar on a 1:1 ratio, is backed by other assets like Ethereum, USDC, Wrapped BTC, and several others, through an overcollateralized mechanism to maintain its intended stable price.

MakerDAO Selects Two Investment Firms

The MakerDAO community approved two investment firms to safeguard the funds: Sygnum Bank and Baillie Gifford.

Sygnum Bank, on its part, will collaborate with BlackRock Switzerland to cater for the responsibility of converting 250 million DAI into U.S. dollars, which will subsequently be utilized in securing the traditional assets.

Commenting on his company’s role in the development, Martin Burgherr, Sygnum Bank’s Chief Clients Officer, said:

“Maker’s vote confirmed Sygnum as a “crypto-native” bank, working hand-in-glove with the DeFi community. It is proof that traditional-crypto finance industry investments can flow both ways, and that the future has heritage, especially when shaping next-generation finance.”