MakerDAO, the stablecoin DAI’s issuer, has taken the first step toward allocating $500 million of its stablecoin reserves to short-term US treasury bonds and investment-grade corporate bonds.
Following an executive vote by Maker token holders, the decentralized autonomous organization (DAO) approved a $1 million pilot transaction on Wednesday. The full investment will be made in the coming days.
MakerDAO explained the move as a means of strengthening the project’s balance sheet by increasing exposure to low-risk liquid traditional assets. The DAO has partnered with Monetalis, an asset management firm, for this allocation. This firm will serve as the asset advisor and will create an acceptable legal structure for the Maker DAO protocol to gain exposure to traditional assets.
The DAO intends to invest 80% of the allocated funds in short-term US Treasury bonds, with the remaining 20% in corporate bonds.
“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,” said Nadia Alvarez, head of MakerGrowth.
The $500 million stablecoin allocation from Monetalis will be divided equally between investment management firms Sygnum Bank and Baillie Gifford via Monetalis. MakerDAO stated that this will happen in two stages.
In the first phase, asset management firm Sygnum will act as a crypto-to-fiat gateway, assisting in the conversion of 250 million MakerDAO stablecoins into US dollars, which will then be diversified into traditional assets.
MakerDAO established DAI in 2017 as a decentralized stablecoin backed by ether (ETH) and other crypto collaterals. MakerDAO has recently shifted to a strategy of diversifying its treasury into real-world assets (RWAs).
Per CoinGeko data, DAI is currently the fourth-largest US dollar stablecoin, with a market capitalization of more than $6.3 billion.
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