Technique Helped DeFi Lender Climate The Bear Market By Producing Yield On Reserves
Maker will dramatically improve its publicity to U.S. Treasuries, doubling down on a method that has paid off handsomely over the previous 12 months.
MakerDAO, the decentralized group that runs the Maker protocol, voted this week to take a position as much as $750M in U.S. Treasuries. The measure handed with three-quarters of the votes solid in favor.
The yield earned from Treasuries and different real-world property has cushioned an in any other case dramatic drop in income at Maker. However the lending protocol was constructed, partly, to create a censorship-resistant, dollar-pegged token. The larger its publicity to real-world property, the additional it strikes from its unique mission.
Maker’s governance token, MKR, is down round 5% over the previous week, in keeping with CoinGecko.
Maker is the second-largest protocol in DeFi, with nearly $8B in consumer deposits, in keeping with Defi Llama.
Debtors can mint its DAI stablecoin by depositing collateral property like ETH and WBTC within the protocol’s good contracts. DAI is the fourth-largest stablecoin with a $5.4B market cap, in keeping with CoinGecko.
The transfer might greater than double Maker’s publicity to U.S. Treasuries; in October, the DAO voted to take a position as much as $500M in U.S. Treasuries and company bonds.
The technique has helped Maker climate the bear market.
In response to a report the protocol printed final month, Maker’s internet revenue fell sharply final 12 months. Revenue in 2021 was $90M; in 2022, it was $19M.
However the report credited the DAO’s funding in real-world property, a category that features treasuries, with producing half of the protocol’s earnings regardless of representing solely 10% of its holdings.