Stablecoin DeFi Protocol MakerDAO Puts $500 Million in U.S. Treasuries, Bonds

2 min readOct 12, 2022

MakerDAO is turning to Real World Assets (RWAs) to future-proof the DAOs treasury.

DeFi stablecoin issuer — MakerDAO, which founded DAI in 2017 as an alternative to the legacy banking system — is moving $500 million of its treasury into short-term US Treasuries and corporate bonds.

DAI is a crypto stablecoin that attempts to maintain its 1:1 value with the U.S. dollar by locking other crypto assets in Collateralized Debt Position (CDPs) that execute via smart contracts through the Maker Protocol.

The Maker Protocol uses CDPs running on Ethereum to enable borrowers to lock ETH and other crypto assets, thus collateralising it, in order to generate new DAI tokens in the form of loans.

If borrowers wish to recover the locked ETH, they will have to return the DAI to the protocol and pay a fee. In the event of liquidation, the Maker Protocol will take the collateral and sell it using an internal market-based auction mechanism.

The DAO’s treasury is supported by Ether (ETH) and other crypto collaterals so as to backstop its stablecoin DAI.

In the last year, MakerDAO has pivoted to a strategy of diversifying its treasury into real-world assets (RWAs) like US Treasuries and corporate bonds. The decision to leverage DAI beyond crypto was put to a vote in June by holders of the Maker Protocol governance token, MKR.

Short-term Treasuries will make up 80% of the aforementioned $500million fund, with 40% of that into zero-to-one year US Treasury iShares ETFs and 60% into one-to-three year US Treasury iShares ETFs from BlackRock.

The aim of Maker’s latest legacy investment strategy is to sustainably increase revenue to the protocol and further diversify its asset base, which is seen as necessary for DAI supply to expand, alongside further adoption.

It is interesting to see DeFi protocols like MakerDAO forging paths into the world of legacy finance — a system it aims to disrupt.

Currently, DAI is the fourth-largest US dollar stablecoin with a market capitalisation of over $6.3 billion.

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