On March 16, lending protocol and stablecoin issuer MakerDAO passed a proposal to increase its portfolio holdings of United States Treasury bonds by 150%, from $500 million to $1.25 billion.
The proposal aims to increase the protocol’s exposure to real-world assets and high-quality bonds following the Dai stablecoin losing its $1 peg during market volatility on March 11. The $750 million debt ceiling hike was approved by 77% of Maker’s delegates.
MakerDAO plans to use $750 million of USDC in the PSM to purchase more US Treasury bonds, diversifying its liquid assets that back DAI. The bonds will be purchased with equal maturities, biweekly and over a six-month period, totaling 12 slots of $62.5 million each. MakerDAO expects to deliver a net annualized yield of 4.6% to 4.5% after custody and also aims to boost its revenue stream by trading costs.
The proposal would allow Maker “to take advantage of the current yield environment, and generate further revenue on Maker’s PSM Assets, in a flexible, liquid manner,” according to the proposal. Treasury’s yields for 10-year constant maturity were at 3.64% on March 14, according to Federal Reserve data.
The proposal was well-received, with 77% of Maker’s delegates voting in favor of it. MakerDAO will deploy the debt ceiling increase under the same terms and transaction mechanisms as set out and approved in MIP65. The debt ceiling increase will be deployed under a structure based on MIP65 to hold assets and mitigate any single entity exposure concerns. The implementation of the asset strategy will be carried out by Sygnum Bank under an execution mandate set out in a MakerDAO resolution instruction.
MakerDAO’s decision to increase its portfolio holdings of US Treasury bonds is expected to generate further revenue and reduce risks associated with volatile market conditions. The proposal was well-received by the DAO and is expected to be executed in a flexible, liquid manner to take advantage of the current yield environment. The move towards real-world assets and high-quality bonds is expected to improve the stability of MakerDAO’s stablecoin Dai and boost investor confidence.
#makerdao #maker #DAI #azcoinnews #MKR This article was republished from azcoinnews.com