MakerDAO, the autonomous organization that powers DAI, has made the commendable decision to invest $500 million in US treasuries and corporate bonds. The fund is geared towards the diversification of its balance sheet, revenue expansion, and providing the protocol with additional low-risk yield.
On the 6th of October, the DAO stated that DAI allocation will foster the use of digital assets in the traditional world and boost the token’s influence outside the crypto space. After the first round of voting, which took place at the end of June, the MakerDAO community unanimously decided to allocate 80% of the fund to short-term treasuries and 20% to corporate bonds. DeFi asset advisor, Monetalis, has now completed the deployment of $1 million.
Although DeFi recorded some significant progress in the previous bull market, it has encountered numerous challenges this year. Some of these problems are the crash in the prices of tokens supporting the system and the incessant hacks plaguing the crypto space. In an attempt to resolve these issues, many projects have curated different coping mechanisms. Lido recently sold its native token to Dragonfly to cover two years’ worth of expenses.
MakerDAO’s latest investment plan comes not long after TerraUSD, another decentralized stablecoin, crashed. Maker’s approach is a typical example of decentralized governance participation. Contrary to TerraUSD’s algorithmic model of keeping its peg to the dollar, DAI stablecoin is issued based on over-collateralization. According to CoinGecko, it is the fourth-largest decentralized stablecoin by market capitalization. The stablecoin is supported by ETH deposited in its smart contracts. Based on previous deliberations, it has been concluded that investing in treasuries and short bonds would not affect its peg to the dollar in any way.
