- DAI’s stablecoin liquid backing is being diversified by exposure to real-world assets.
- 70% of Maker’s total income came from RWA-based investments.
The DAI stablecoin’s issuing body, MakerDAO, has voted in favor of increasing its allocation to existing US Treasury holdings. DAI’s stablecoin liquid backing is being diversified by exposure to real-world assets (RWAs). Such as an increase in investments in government treasury bonds.
Last year, MakerDAO’s RWA strategy kicked off with a $500 million investment in U.S. Treasuries. That was a change from the protocol’s original intent, which had been to use crypto-native lending. In December 2022, according to a financial statement published earlier in the year, 70% of Maker’s total income came from RWA-based investments.
Looking For Alternative Backing
Furthermore, the crypto-native lending industry was hit hard in 2022, prompting MakerDAO to switch to RWAs. The event occurred during a year-long bear market that caused many people to fail on large lending holdings and declare bankruptcy. The bear drop was compounded by the Terra and FTX crashes, which also impacted this market segment particularly hard.
Moreover, some of the most prominent names in the CeFi lending industry, like Voyager and Celsius, have failed. Fears that the Entire DeFi ecosystem may collapse have been fueled by the fact that a number of other crypto-based lenders have also discontinued their frontend platforms.
Nevertheless, DeFi lenders are pushing forward anyhow. Lending protocols from both Aave and Compound have had multichain enhancements made available to users.
When Ethereum’s Shanghai upgrade is complete, the ability to withdraw staked ether is likely to be activated, and these platforms are poised to play a pivotal role in the resulting liquid staking derivatives market.
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