MakerDAO Crypto News: The Maker Community Opted For A Liquid Bond Strategy To Reduce Credit Risk

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While the world is going through financial instability and uncertainty, MakerDAO, the decentralized autonomous organization behind the Dai stablecoin, is doing something different. Focused on building the future of finance, MakerDao is currently voting to allocate 500 million in treasury funds.

  • A vote is currently being held to allocate 500 million in treasury funds by MakerDAO, the decentralized autonomous organization behind the Dai stablecoin.
  • As part of their asset allocation strategy, Makers have chosen both short-term US Treasury bonds and investment-grade (IG) corporate bonds.
  • A decision is currently being made as to whether the $500 million should be allocated exclusively to US short Treasuries or to a split of 80%-20%.

In a poll determining how funds should be allocated, the Maker community opted for a liquid bond strategy and execution. The company said it hopes to reduce counterparty and credit risk by introducing an asset with real-world value. As of now, Maker’s treasury largely consists of stablecoins that do not yield much, and the community must decide which assets to add. 

$500M Allocated to US Short Treasuries

It had previously been decided that US short-term Treasuries and investment grade corporate bonds would be Makers’ preferred asset allocation options. A decision is currently being made as to whether the $500 million should be allocated exclusively to US short Treasuries or if it should be divided 80%-20% between short Treasuries and IG corporate bonds. 

According to the results of the poll, which is expected to end later this week, 80-20 split accounts for the majority of votes. In behalf of Maker, Monetalis will establish a trust to hold the bonds. Nevertheless, the asset allocation outlines that only Maker will be able to control the funds of the legal structure, and will be able to liquidate the investment by executive vote alone.

MakerDAO Ecosystem

As with any tumultuous market, MakerDAO has also experienced ups and downs. As a result of TerraUSD’s collapse last month, MKR, the governance token on the MakerDAO ecosystem, surged by nearly 50%. The resurgence also benefited DAI. 

The crypto lender Celsius borrowed 100 million DAI from Aave’s Ethereum V2 earlier this month against collateral of stETH. As a result, MakerDAO suspended the issuance and deposit of its DAI stablecoin.

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Chris Munch

Chris Munch is a professional cryptocurrency and blockchain writer with a background in software businesses, and has been involved in marketing within the cryptocurrency space. With a passion for innovation, Chris brings a unique and insightful perspective to the world of crypto and blockchain. Chris has a deep understanding of the economic, psychological, marketing and financial forces that drive the crypto market, and has made a number of accurate calls of major shifts in market trends. He is constantly researching and studying the latest trends and technologies, ensuring that he is always up-to-date on the latest developments in the industry. Chris’ writing is characterized by his ability to explain complex concepts in a clear and concise manner, making it accessible to a wide audience of readers.