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MakerDAO's DeFi master plan: BlackRock, Ethereum and government bonds

 


MakerDao, one of the pioneers in the DeFi space, is converting half a billion US dollars of its own DAI stablecoin to use for investing in US Treasuries.


After a vote, the governance portion of MakerDAO decided to take this step in order to diversify the protocol's investment portfolio. Funds will soon flow into short-dated US Treasuries and corporate bonds, traditionally seen as safe havens in a turbulent economic environment. This move is part of the DeFi project’s “master plan.” In the future, MakerDAO would then like to accumulate Ethereum .


According to MakerDAO 's Twitter account , the allocation of DAI is to promote the usability of digital assets in the traditional space and expand DAI's influence beyond crypto.


The MakerDAO Endgame Plan: Ethereum and Government Bonds

The first vote on the diversification of the portfolio of the DeFi project took place as early as June 2022. The DeFi consulting company Monetalis made the first investment of $1 million. A total of 80% flowed into short-term government bonds (“Treasury Bills”) and 20% into corporate bonds.


Treasury bills are short-term US government securities that are sold at a discount to their face value. The term ranges from a few days to a year. Corporate bonds, on the other hand, are debt instruments that companies issue and sell to investors.


According to Nadia Alvarez, head of MakerGrowth, the 80:20 split between government bonds and regular bonds remained the preferred approach during the DeFi project voting process :


“The whole thing illustrates the opportunities associated with such a move. It's very exciting to see the community providing such strong support."


Furthermore, the asset management company Sygnum plans to convert 250 million DAI into USD together with BlackRock Switzerland . Together, the companies would then like to diversify the capital into traditional investments.


This move is also part of MakerDAO's endgame plan , the first phase of which involves increasing exposure to real assets. After that, MakerDAO wants to accumulate more Ethereum .


As we already reported , MakerDAO is planning a long-term strategy to make the DeFi protocol as stress-resistant and decentralized as possible. Part of this strategy is their own “stablecoin”, the DAI token. Compared to other stablecoins, this can not be fully backed by US dollars.


Additionally, DAI is now the fourth largest stablecoin (by market cap) and the only truly large and successful decentralized stablecoin. Also, the DAI supply currently in circulation is $6.3 billion and the share of the stablecoin market is 4.2%.


How is the DeFi token MKR performing?

MakerDAO's native token, MKR, is trading at around $840 at the time of writing. In the last two weeks, the DeFi token has seen a price gain of almost 30%, while most other cryptocurrencies have moved sideways.


However , the MKR price is still suffering from the current bear market . MKR price is currently still 87% off the last all-time high set in May 2021, data from CoinGecko shows.


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