MakerDAO Proposes MIP90, Allocates $1.28 Billion DAI for Short-Term US Bond Investment

MakerDAO, a leading decentralized autonomous organization (DAO), has proposed MIP90 and successfully secured 99.99% approval in a recent vote held on June 1st. The proposal aims to establish a new vault valued at 1.28 billion DAI, dedicated to investing in short-term US bonds.

Under the proposal, MakerDAO plans to allocate this substantial amount to purchase US bonds over a span of six months, with monthly disbursements of 16.67%. Blocktower Capital, a prominent cryptocurrency investment firm, will serve as the broker and receive a 0.15% fee from the vault, totaling up to $1.9 million USD. Wedbush Securities Inc. has been appointed as the custodian for these assets, ensuring their safekeeping. Coinbase and Galaxy Digital will act as transaction agents, facilitating the conversion of DAI to USD.

This recent decision by MakerDAO is part of its ongoing strategy to diversify reserve assets for DAI, with a total reserve of 5 billion DAI. The organization aims to increase revenue through various strategies, such as the recent 2.6% interest earned from the $500 million USDC deposited with Coinbase. Additionally, MakerDAO has been earning returns by holding GUSD from Gemini as reserve assets. These initiatives have resulted in a decrease in the proportion of USDC in Maker’s reserve from 50% in mid-2022 to only 23% as of the end of May 2023.

In another vote held on June 1st, the MakerDAO community decided to remove $500 million worth of the stablecoin USDP from its reserve for DAI. It is noteworthy that MakerDAO previously held up to half of the total supply of this $1 billion stablecoin. USDP, issued by Paxos, is also responsible for the issuance of BUSD for Binance and faced regulatory scrutiny in February when US authorities requested a halt in BUSD support.

Interestingly, MakerDAO’s substantial investment in US bonds stands in contrast to Circle, the company behind another stablecoin, USDC. Circle is actively seeking to eliminate US bonds from its holdings due to concerns over the US government’s debt instability. At the same time, the prominent stablecoin Tether has declared its intention to shift US bonds to Bitcoin.

The decision to invest heavily in US bonds reflects MakerDAO’s commitment to exploring traditional assets and solidifying its legal framework through collaboration with Monetalis, a private lending institution acting as asset advisor. This move represents an important step towards expanding the use cases and value proposition of the DAI stablecoin.

As the cryptocurrency landscape continues to evolve, MakerDAO’s strategic diversification efforts position it as a trailblazer in the decentralized finance (DeFi) industry. The successful passage of MIP90 and the allocation of $1.28 billion DAI for short-term US bond investment signify a significant milestone in MakerDAO’s journey towards a robust and resilient financial ecosystem.

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