MakerDAO contributors propose up to $100M allocation for exploring tokenized T-Bills

Quick Take

  • Steakhouse and Phoenix Labs have proposed that the MakerDAO community consider allocating up to $100 million to tokenized T-Bill products.

The DAO-focused financial advisory firm Steakhouse, in collaboration with the research and development company Phoenix Labs, has urged the MakerDAO community to consider allocating up to $100 million from its reserves for investment in tokenized U.S. Treasury Bill (T-Bill) products. The proposal is currently in the discussion phase.

"We suggest that MakerDAO consider allocating up to 100M to develop and experiment with tokenized T-Bill products," the proposal stated.

MakerDAO, the issuer of the DAI decentralized stablecoin, has previously invested over a billion dollars in U.S. Treasurys via off-chain structures since 2022. The organization described the move as a strategy to strengthen its balance sheet through exposure to low-risk, liquid traditional assets.

Tokenized public securities market cap. Image: Dune Analytics.

Tokenized public securities market cap. Image: Dune Analytics.

Proposal cited benefits of tokenized T-Bills for MakerDAO

The authors of the proposed forum post argued that investing in tokenized T-Bills can potentially offer MakerDAO advantages, including greater transparency, simple accounting, and reduced complexity compared to dealing with off-chain T-Bill products. Further such products can offer faster redeemability for stablecoins compared to fiat.

However, Steakhouse and Phoenix Labs also cautioned that on-chain tokenized T-bills can potentially expose the protocol to "higher counterparty risk."

The proposal added it was not about replacing existing arrangements but exploring new avenues for growth and efficiency, the two teams said, urging the community to provide comments, discussions or pushback.

© 2023 The Block. All Rights Reserved. This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.