MakerDAO, a stablecoin issuer and lending protocol, has voted in favor of a proposal to expand the amount of US government bonds in its portfolio by 150%, from $500 million to $1.25 billion. This would be a significant increase. This action is carried out with the objective of diversifying its liquid assets and obtaining an annual net return in the range of 4.6% to 4.5%. The remaining $500 million of USDC in the PSM will be handled by decentralized financial asset manager Monetalis Clydesdale. MakerDAO has plans to deploy $750 million of USDC in the PSM to acquire more US Treasuries.
The bonds will be acquired with equal, monthly maturities and over a period of six months; the total number of spaces will be 12, and each space will have a value of $62.5 million. After taking custody costs into account, the proposal is expected to generate a net annual return of 4.6% to 4.5%. MakerDAO’s revenue stream can potentially benefit from an increase in business expenses. This action will result in Monetalis Clydesdale’s continued management of a current $500 million allocation from the United States Treasury, which has been in place since October 2022.
On the other hand, some people who participated in the governance forum had reservations about the proposal. They noted that MakerDAO has yet to receive any money from Monetalis for the first half a billion DAI, and stated that questions asked on Maker’s Discord and the governance forum were not promptly answered, which did not provide enough time to evaluate the proposal.
The failure of Silicon Valley Bank on March 11 sparked widespread fear in the markets and led to the decoupling of several stablecoins, including USD Coin (USDC) and Dai. In response to this, MakerDAO said that its community was working on suggestions for converting its stablecoin exposure into money market instruments, such as US Treasuries, “with the goal of diversifying liquid DAI collateral.” .
