MakerDAO’s Proposal to Raise Investment Ceiling Passes

03/17/2023 22:51 • Metaverse Matters • 131 views

It is reported that, according to official news, MakerDAO’s proposal to raise the investment ceiling of US treasury bond bonds from US $500 million to US $1.25 billion has been passed. This proposal won 77% of the votes. MakerDAO will use USD750 million in PSM to purchase more US treasury bond bonds, thus diversifying the current assets supporting DAI. These bonds mature every two weeks and will be purchased a total of 12 times over a six-month period for $62.5 million each. According to the proposal, the strategy expects a net annualized yield of 4.6% to 4.5% after deducting custody and expected transaction costs.

MakerDAO has approved the proposal to raise the investment ceiling of US treasury bond bonds to US $1.25 billion

Analysis based on this information:

MakerDAO is a decentralized finance (DeFi) platform that operates on the Ethereum blockchain. The platform enables users to borrow its stablecoin, DAI, by collateralizing other cryptocurrencies. MakerDAO recently proposed to raise its investment ceiling in US Treasury Bond Bonds from US$500 million to US$1.25 billion, and the proposal has received approval. The proposal won 77% of the votes, indicating a strong majority in favor of MakerDAO’s decision.

The platform will be using USD750 million in the Peg Stability Module (PSM) to purchase US Treasury Bond Bonds. PSM is a smart contract that manages DAI’s peg to the US dollar. This purchase is intended to diversify the current assets supporting DAI. These bonds mature every two weeks and will be purchased 12 times over a six-month period for $62.5 million each.

The strategy expects a net annualized yield of 4.5% to 4.6% after deducting custody and expected transaction costs. This is a relatively safe investment option that provides a steady stream of income. Additionally, the platform will provide DAI holders with a more diversified set of underlying assets, which would increase the overall strength of the system.

The decision to raise the investment ceiling is a prudent move by MakerDAO, as it increases its capacity to manage the growing demand for its stablecoin. The use of US Treasury Bond Bonds also serves to stabilize the DAI against fluctuations in the cryptocurrency market, as these bonds are less volatile than other cryptocurrencies.

In conclusion, MakerDAO’s proposal to invest in US Treasury Bond Bonds has been approved, which will allow the platform to expand its investment portfolio and provide its users with a more diversified set of underlying assets. The move is expected to yield a net annualized yield of 4.5% to 4.6%, indicating a safe investment option. The decision underscores MakerDAO’s commitment to maintaining the stability of DAI, reinforcing the platform’s position as a leading DeFi platform.

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