MakerDAO, the group behind the DAI stablecoin, bought $700 million value of US Treasury bonds, bringing the DAO’s whole Treasury bond holdings to $1.2 billion.
The MakerDAO neighborhood already held a preliminary vote to extend its holdings of US Treasury bonds from $500 million to $1.25 billion in March.
The proposal handed with 77.13% of the vote and included a plan to spend a further $750 million on US authorities bonds. These Treasuries had been to be “purchased with maturities equally divided over six months in order that, each two weeks, an analogous quantity of US Treasuries matures (ie 12 ‘slots’ over six months – ie 750M/12 = 62.5M per slot) .” “
As a part of its bond technique, MakerDAO has additionally carried out a six-month US Treasury ladder technique that features a bi-weekly rollover. This method permits the group to capitalize on the present yield surroundings and improve its income.
The acquisition was made by Monetalis Clydesdale Vault, a digital asset supervisor, on behalf of MakerDAO.
Allan Pedersen, CEO of Monetalis Group, said that this improve in MakerDAO’s publicity to real-world property represents a “highly effective, dependable and versatile answer” that may generate extra income for the protocol.
In the meantime, stablecoin issuer Circle has resumed shopping for US Treasuries as a reserve asset for its Circle Reserve Fund (managed by BlackRock).
Circle beforehand exited all of its short-term Treasury funds amid the US debt ceiling standoff final month, with CEO Jeremy Allaire citing a “potential breach of the US authorities’s capability to pay its money owed” as the explanation.
Hedging bets
This current buy aligns with the group’s plans to extend its publicity to such property, as outlined in a proposal revealed in March 2023.
The choice was a part of MakerDAO’s effort to turn out to be extra resilient following an incident by which its stablecoin, DAI, briefly misplaced parity with the US greenback, falling to $0.89 on March 11, someday after the collapse of Silicon Valley Financial institution.
The SVB collapse affected a number of main stablecoins, together with Circle’s USDC, which DAI makes use of in its Peg Stability Module (PSM). In response, MakerDAO deliberate to diversify away from USDC by investing a portion of USDC in its PSM to amass a proposed $750 million in authorities bonds.
MakerDAO’s US Treasury bond technique will not be a brand new enterprise for the group. The DAO first purchased $500 million value of bonds in October 2022, seeing it as a strategy to diversify its collateral pool with conventional low-risk property.
