MakerDAO, a lending protocol and stablecoin issuer, has agreed to a proposal on March 16, 2023, to ensure a 150% increase in its portfolio holdings of United States treasury bonds. It’s believed that the amount for treasury bonds will increase from $500 million to $1.25 billion, as stated by Cointelegraph.
According to Cointelegraph, the proposal intends to expand the protocol’s exposure to real-world assets and “high-quality bonds.” Reportedly, the platform’s Dai stablecoin lost its one dollar peg over market volatility on March 11, 2023. Sources suggest that the $750 million debt ceiling rise was authorised by 77% of Maker’s delegates.
“Under this new deployment, MakerDAO would use $750 million of USDC in the PSM to purchase more US Treasury bonds, thus diversifying its liquid assets that back DAI,” a MakerDAO’s representative stated.
Based on information by Cointelegraph, the bonds will be bought using equal maturities, adding up to 12 slots of $62.5 million each. MakerDAO believes it will clock a net annualised yield of 4.6% to 4.5% post custody. Experts think that MakerDAO’s revenue channel will be enhanced by trading costs.
Moreover, Cointelegraph noted that the proposal would permit MakerDAO “to take advantage of the current yield environment, and generate further revenue on Maker’s PSM Assets, in a flexible, liquid, manner.”
(With insights from Cointelegraph)