MakerDAO raises debt ceiling to $1 billion for Dai allocations in Ethena's stablecoin markets on Morpho

MakerDAO has approved a governance vote to expand its direct deposit module’s debt ceiling to $1 billion for its Dai stablecoin, focusing on investments in Ethena ENA +1.19% ’s USDe and its staked counterpart, sUSDe, through Morpho Labs’ lending vaults.

This adjustment is part of a broader strategy to diversify MakerDAO’s collateral exposure — marking a major financial engagement with Ethena's stablecoin and also allowing the protocol to earn additional yields for users.

An initial $600 million from MakerDAO’s Dai holdings will be allocated to these lending markets, underlining the protocol’s commitment to Ethena’s USDe. This move is facilitated using MakerDAO’s Spark protocol, with a preference for allocations to USDe pools over those for sUSDe.

USDe, distinct from traditional stablecoins, leverages a backing mechanism that combines ETH and derivatives in a cash-and-carry trading framework. This involves staking Ethereum collected from USDe minters and engaging in simultaneous ether futures shorting, introducing a unique approach to stablecoin backing. Its rise has prompted discussions within the crypto sector about the associated risks, particularly concerning USDe’s yield generation methods.

In response to MakerDAO's laest allocation, there was a proposed call from an Aave contributor for a reassessment of Dai’s risk parameters across Aave’s lending markets, suggesting potential adjustments to loan-to-value ratios for Dai-based lending. Notably, Aave is a competitor to both MakerDAO and Morpho.