MakerDAO To Invest $500M In Bonds To Diversify: What's Next?

Zinger Key Points
  • The move is aimed at diversifying MakerDAO's balance sheet and make the backing of its stablecoin more stable.
  • The allocation suggestion was put to the MakerDAO community's vote in late June.

The decentralized autonomous organization (DAO) MakerDAO, which is behind the stablecoin Dai DAI/USD, has set aside $500 million to invest in corporate and U.S. Treasury bonds.

The money will come from its overcollateralized stablecoin, with 80% going to investment-grade corporate bonds and 20% going to short-term U.S. Treasury securities.

The allocation suggestion was put to the MakerDAO community's vote in late June.

Since the collapse of the $40 billion Terra ecosystem and its stablecoin UST, which had repercussions on the larger crypto market, stablecoins and their collaterals have been a topic of discussion.

MakerDAO will allocate the funds, which will be initiated by decentralized finance (DeFi) asset advisor Monetalis, in order to diversify its balance sheet into "scalable legacy finance investments, minimizing exposure to any one asset, and extending income sources."

Digital Asset Bank Sygnum Is Primary Partner

Digital asset bank Sygnum revealed in a separate statement it is the primary partner in the $500 million diversification endeavor.

MakerDAO claimed to have finished a $1 million transaction and will soon complete the other investments. In order to deploy $250 million in the initial phase of the strategy, Signum stated it is collaborating with BlackRock Switzerland.

DAOs are organizations without a centralized management structure and software, not human managers, make the decisions.

Lending, trading and other financial operations are done on a blockchain without conventional middlemen and are collectively referred to as DeFi.

MakerDAO's investing strategy is an illustration of decentralized governance involvement and an industry attempt to improve the stability of tainted algorithmic stablecoins.

MakerDAO's stablecoin DAI is supported by Ethereum ETH/USD placed into its smart contracts.

Also Read: What Is A DAO?

Photo: Piotr Swat via Shutterstock

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