Strategy Helped DeFi Lender Weather The Bear Market By Generating 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 yr.
MakerDAO, the decentralized group that runs the Maker protocol, voted this week to speculate 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. But the lending protocol was constructed, partially, to create a censorship-resistant, dollar-pegged token. The better its publicity to real-world property, the additional it strikes from its authentic mission.
Maker’s governance token, MKR, is down round 5% over the previous week, in line with CoinGecko.
Maker is the second-largest protocol in DeFi, with virtually $8B in person deposits, in line with Defi Llama.
Borrowers can mint its DAI stablecoin by depositing collateral property like ETH and WBTC within the protocol’s sensible contracts. DAI is the fourth-largest stablecoin with a $5.4B market cap, in line with CoinGecko.
The transfer may greater than double Maker’s publicity to U.S. Treasuries; in October, the DAO voted to speculate as much as $500M in U.S. Treasuries and company bonds.
The technique has helped Maker climate the bear market.
According to a report the protocol printed final month, Maker’s web revenue fell sharply final yr. Profit in 2021 was $90M; in 2022, it was $19M.
But 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.