MakerDAO to Invest $500M in US Treasuries and Corporate Bonds

UTC by Bhushan Akolkar · 2 min read
MakerDAO to Invest $500M in US Treasuries and Corporate Bonds
Photo: Depositphotos

MakerDAO has joined hands with an asset advisory firm called Monetalis which will be assisting them in the allocation of funds across short-term US treasury bonds and investment-grade corporate bonds.

As the Fed undertakes several quantitative tightening measures by raising the interest rates, US securities are turning more attractive in this environment. MakerDAO, the issuer of DAI stablecoin, has announced that it will be investing $500 million of its stablecoin reserves into short-term US securities aka Treasury Bonds. Besides, they would also be investing in some attractive corporate bonds.

On Wednesday, October 5, the decentralized autonomous organization MakerDAO approved a $1 million pilot transaction after an executive vote by Maker token holders. The complete investment shall happen in the coming days.

MakerDAO said that the move will help the project strengthen the balance sheet while getting exposure to low-risk liquid traditional assets. To proceed with these transactions, MakerDAO has joined hands with an asset advisory firm called Monetalis. In addition to being an asset advisor, Montalis will guide MakerDAO to form an acceptable legal structure and gain exposure to traditional assets.

As per the current plan, the DAO will invest 80% of the allocated sum into short-term US treasury bonds. It will invest the remaining 20% into investment-grade corporate bonds. Speaking on the development, Nadia Alvarez, head of MakerGrowth said:

“The 80-20 split between treasuries and bonds remained the favored approach during the voting process. This showcases the opportunity associated with the move, and seeing such adamant support from the community is very exciting”.

Allocation of $500 Million

As said, Monetalis will be assisting MakerDAO in the allocation of $500 million of its assets. It will be dividing the investment equally between investment management firms Sygnum Bank and Baillie Gifford via Monetalis.

In the first phase, the management firm Sygnum Bank will serve as a crypto-to-fiat gateway. It will help in converting $250 million worth of MakerDAO’s stablecoin into US dollars. MakerDAO explained that the investment shall happen in two phases. It noted:

“Based on the accepted Ambassador Program’s Special Purpose Fund Request, 81,000 DAI will be transferred to the program’s multisig at 0xF411d823a48D18B32e608274Df16a9957fE33E45 if this executive proposal passes. A total of 247.70 MKR will be streamed to the GovAlpha (GOV-001) Core Unit as detailed below, if this executive proposal passes.”

Over the last year, MakerDAO has been working on a strategy for diversifying its treasury into real-world assets (RWAs). Currently, its DAI stablecoin is the fourth-largest USD stablecoin with a market value of $6.3 billion.

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