MakerDAO has passed a governance decision that will create new vaults where its native token DAI will be invested into treasuries and corporate bonds to earn yield.
As interest rates rise, increasing the amount of yield that MakerDAO is able to earn will likely help retain investors, who may seek to move funds elsewhere in a bid to earn more yield. The market cap of DAI has fallen from a peak of about $10 billion in February to $6.3 billion at press time.
Monetalis Clydesdale is the “DeFi asset advisor” assisting in the proposal, known as MIP65. Initially, one million DAI will be allocated to verify that Monetalis Clydesdale will be able to access it.
Once the one million is successfully withdrawn, 250 million DAI will be allocated to Bank Sygnum, which will help with the asset purchases and holding. At a later date, an additional 250 million DAI will be sent to investment management firm Baillie Gifford, which will also help with purchasing and holding the assets.
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MakerDAO yield decision comes as legislation looms
The proposal comes at a precarious time for Tether-like assets such as DAI. Reports indicate a new bill may soon be proposed that could potentially ban stablecoins like DAI for two years.
According to Bloomberg, the latest version of the bill would ban the creation of new stablecoins “marketed as being able to be converted, redeemed or repurchased for a fixed amount of monetary value, and that rely solely on the value of another digital asset from the same creator to maintain their fixed price.”
It’s unclear whether such a ban would be placed on pre-existing stablecoins that fit the description, such as DAI. However, the bill would also prohibit the co-mingling of customer funds with company assets, in a bid to keep customers safe in the event of bankruptcy.