The community that governs MakerDAO, the decentralized autonomous organization (DAO) behind the stablecoin DAI, has allotted $500 million to invest in corporate bonds and U.S. Treasury securities.
The move, which will be begun by decentralized-finance (DeFi) asset adviser Monetalis, will be made by makerDAO to diversify its balance sheet into “scalable legacy finance investments, minimizing exposure to any one asset and boosting revenue sources.”
In a separate release, a digital asset bank known as Sygnum stated that it is the primary partner in the diversification project that involves $500 million.
How Will MakerDAO Proceed To Make Use of This Investment?
- Its overcollateralized stablecoin will be the source of the funds, with 80% of them flowing toward short-term U.S. Treasurys and 20% toward investment-grade corporate bonds.
- The community of MakerDAO decided to vote in favour of the allocation plan put forward before the end of June.
- Since the implosion of the $40 billion Terra ecosystem and its stablecoin UST, which had rippling effects on the larger cryptocurrency market, there has been a lot of discussion regarding stablecoins and the collateral that backs them up.
- The maker has announced that a transaction for $1 million has been completed and that additional investments will soon follow. According to Signum, the company is collaborating with BlackRock Switzerland to allot $250 million for the initiative’s first phase.
More About DAOs and the MakerDAO’s Investment Strategy:
DAOs, or decentralized autonomous organizations, do not have a centralized leadership structure and make decisions by software rather than by human administrators. Lending, trading, and other forms of financial activity carried out on a blockchain without traditional middlemen are collectively called “DeFi.”
Furthermore, the investment strategy proposed by makerDAO is an example of decentralized participation in governance and an effort by the industry to improve the stability of tainted algorithmic stablecoins. The stablecoin known as DAI issued by MakerDAO is decentralized and overcollateralized, as it is supported by ether (ETH) deposited into its respective smart contracts.