MakerDAO announced on Thursday an open competition to invest $1 billion in tokenized U.S. Treasury offerings.
Top issuers such as BlackRock-Securitize, Ondo Finance and Superstate are planning to apply, they told CoinDesk.
Crypto lending platform MakerDAO, the protocol behind the $5 billion stablecoin DAI, is planning to invest $1 billion of its reserves in tokenized U.S. Treasury products. Top players in the space including BlackRock's BUIDL, Superstate and Ondo Finance are lining up to apply for the proposal.
"We think this is a very good move from MakerDAO and we are excited to participate with Blackrock's BUIDL," Carlos Domingo, CEO of tokenization platform Securitize, BlackRock's issuance partner, said in an email to CoinDesk. "As the leading tokenized treasury issuer, we will certainly apply.”
"Superstate's USTB is an ideal partner for MakerDAO," Rob Leshner, founder of Superstate, told CoinDesk "We're excited that MakerDAO is creating an open process where we can introduce USTB to the community."
Ondo Finance {{ONDO}}, the $550 million RWA platform, also plans to participate. "It's a natural fit in our mission of bringing institutional-grade financial products and services to everyone," Nathan Allman, founder of Ondo Finance, said in a Telegram message. "We look forward to participating."
MakerDAO's plan means a significant reshuffle of its reserve strategy as the protocol, one of the first players in decentralized finance (DeFi), ushers into a next era under founder Rune Christensen's Endgame Plan. The protocol has spearheaded crypto's real-world asset (RWA) trend, backing its decentralized stablecoin in part by U.S. government bonds and bills held off-chain with a range of partners.
Read more: Rune Christensen Explains Why He Wants to Remake Maker and Kill DAI
The open competition to allocate $1 billion to tokenized offerings was announced on Thursday at ETHCC in Brussels, Belgium and also outlined in a governance post. Applications will open on August 12, the post said.
@AesPoker of @SteakhouseFi annoucing the @MakerDAO RWA Grand Prix. 1,000,000,000$ to be invested in tokenized money market funds. Competition opens August 12th. pic.twitter.com/EmwwfOG4cA
— Sébastien Derivaux (@SebVentures) July 11, 2024
The investment will be funded from redirecting $500-$500 million of reserves from vaults managed by Monetalis Clydesdale and Andromeda BlockTower, Sebastien Derivaux, co-founder of Steakhouse Financial, a DeFi consulting firm that was also the author of the tokenized treasury proposal.
Monetalis will offboard MakerDAO after community backlash for failing to present adequate reporting about the reserves in a timely manner.
Big boost for tokenized treasuries
MakerDAO's investment would mean a huge boost for the tokenized real-world asset protocols due to its sheer size.
U.S. Treasuries have been at the forefront of tokenization efforts of digital asset firms and traditional financial institutions alike. These products are attractive for protocol treasuries as a low-risk instrument where they can park their blockchain-based cash and earn a stable yield without leaving the blockchain ecosystem.
The market for these products tripled in a year to $1.85 billion, according to data provider rwa.xyz.
MakerDAO's allocation would mean another 55% growth.
This is not the first similar action, though.
ArbitrumDAO, an ecosystem development organization of Ethereum layer-2 Arbitrum, finalized a similar contest called STEP on Thursday to allocate the equivalent of 35 million of Arbitrum's native tokens {{ARB}} – roughly $27 million worth – in tokenized offerings.