MakerDAO Passes First Vote on Proposal to Increase US Treasury Investments to $1.25 Billion

MakerDAO, a decentralized autonomous organization that issues the DAI stablecoin, has voted in favor of allocating more funds to its current US Treasury investments.

The increase in investments in government treasury bonds aims to diversify DAI’s stablecoin liquid backing through exposure to real-world assets (RWAs).

MakerDAO Votes to Increase Debt Ceiling by $750 Million

The first stage of MakerDAO’s expanded foray into investing in RWAs has concluded with the passing of the preliminary vote to increase the DAO’s real-world asset vault debt ceiling to 1.25 billion DAI ($1.25 billion).

The governance poll, which started on March 13, was active for three days and ended on Thursday, March 16, 2023. Based on the results, the majority of the votes were in favor of the proposal to raise the debt ceiling by $750 million. The debt ceiling in MakerDAO refers to the maximum DAI that can be minted against the collateral in the vault. The current for this vault is $500 million.

This concluded poll is only a preliminary vote. The matter will be put to an executive vote among DAO delegates. If it passes, it will be executed as part of a future governance package.

MakerDAO began its RWA investment strategy last year with a $500 million allocation to U.S. Treasurys. This marked a departure from the protocol’s crypto-native lending strategy since inception. A financial statement from earlier in the year revealed that RWA-based investments contributed 70% of Maker’s gross revenue in December 2022.

Crypto Lending on the Brink?

MakerDAO’s pivot to RWAs comes as the crypto-native lending space took a battering in 2022. This came amid a year-long bear market that saw many participants defaulting on huge loan positions and going into bankruptcy. This sector of the market also seemed to have been hardest hit by the Terra and FTX collapses that exacerbated the bear decline

CeFi lenders such as Voyager and Celsius have gone bankrupt. Meanwhile, they are not alone in this turmoil, as several Solana-based crypto lenders have also sunset their frontend platforms, leading to fears that the Solana DeFi ecosystem might be heading to zero.

Despite this, DeFi lenders are still looking to make progress. Both Aave and Compound have released multichain upgrades of their lending protocols. These platforms are expected to play a significant role in the liquid staking derivatives market that could emerge following the activation of staked ether withdrawals after Ethereum completes its Shanghai upgrade.