DeFi giant MakerDAO’s community is mulling a proposal that would generate an additional $33.75 million in revenue per year.
In a recent proposal on Maker’s governance forum, DeFi asset advisor Monetalis called for raising the debt ceiling by an additional $750 million for Maker Improvement Proposal (MIP) 65. These funds would be deployed into U.S Treasuries with a 6-month expiry.MIP 65 is concerned with Maker’s liquid bond strategy, onboarding real world assets (RWAs) to acquire USDC via the Peg Stability Module (PSM) and investing them in high-quality liquid strategies.
By raising the debt ceiling to $1.25 billion and implementing a U.S. Treasury ladder strategy with a bi-weekly roll over, Maker could generate more revenue on its PSM assets by taking advantage of the current yield environment, said Monetalis CEO Allan Pedersen.
“Laddering” is an investing strategy that typically produces steady cash inflow. If a bond at the lower ends of the ladder matures, one can reinvest the proceeds in newer bonds with higher rates fairly quickly.
If approved, the asset strategy will be implemented by Sygnum Bank under an execution mandate determined by MakerDAO.
Pedersen estimates that the proposed strategy would generate a net annualized yield of 4.5% after custody and expected trading cost, which translates to $1.3 million in revenue to Maker every two weeks.
Proposal to allocate an additional 750m to short-duration US treasuries.
If approved this will increase Maker revenue by ~33.75m / yr bringing the total to 82.25m / yr.
These additional revenues will go to:
-Dai Savings Rate
— Sam MacPherson (@hexonaut) March 6, 2023
According to Sam MacPherson, who works on protocol engineering at Maker, the proposal would increase revenue by $33.75 million a year – something that would go towards burning MKR, increasing the DAI savings rate and buying ETH.