Stablecoins: MakerDAO invests 500 million DAI in traditional assets

It is in partnership with the asset manager Montenalis that MakerDAO will carry out its plan to convert 500 million DAI into traditional assets while protecting itself from the volatility of cryptos at the same time.

MakerDAO relies on the diversification of its reserves

No one is unaware of the tumultuous context around stablecoins in recent months. Thus, MakerDAO has opted for a conservative approach in its exposure to cryptos. In this respect, the objective of its approach is to stabilize its balance sheet by exposing itself to assets that traditionally present a low risk.

The first stage of this operation is a pilot transaction of one million dollars. This has also been authorized by the governance community of MakerDAO, the Decentralized Autonomous Organization (DAO). Indeed, the holders of the Maker Token (MKR) approved it in an executive vote that took place on Wednesday, October 05. Thereafter, Maker DAO will make the full investment to implement its plan.

500 million DAI broken down into 80-20

Monetalis is responsible for supporting MakerDAO in its investment program. To do this, the asset manager will have the role of advisor. In addition, it will create a legal structure adapted to the MakerDAO protocol. The plan is to allocate 80% of the sum to short-term US Treasury bonds and 20% to corporate bonds.

In addition, the allocation of funds will be done in two phases. Monetalis will be responsible for dividing the 500 million stablecoins equally between two investment companies: Sygnum Bank and Baillie Gifford.

In the first phase, Sygnum will act as a gateway for the conversion of 250 million DAI into fiat currency. Thus, the US dollars obtained will then be injected into traditional assets. The digital asset bank is already working with BlackRock Switzerland. This collaboration aims to allocate and invest the 250 million greenbacks in a portfolio of BlackRock iShares ETFs.

Stablecoins create bridges between cryptocurrencies and fiat currencies. Liquidity and volatility are the major issues. MakerDAO has chosen to provide a structural response. The success of the pilot operation will be decisive for the follow-up to be given to its investment plan.

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