MakerDAO likely to spend $100 million on development and testing of tokenized US Treasury bonds
- MakerDAO’s core member of strategic finance has proposed allocating $100 million in funding to US Treasury bond products.
- The decentralized organization has invested $2 billion in short-term bonds after declaring its intent to invest in Treasury bills.
- MKR's supply on exchanges is climbing steadily this week, while Maker price crumbles under selling pressure.
MakerDAO expressed its interest in acquiring US Treasury bills back in February 2022. Since then, the decentralized organization spent $2 billion purchasing short-term bonds.
A core strategic finance member of the DAO, Steakhouse, recently proposed spending $100 million on development and testing of US Treasury bond products, with mixed reactions from the community of members.
Also read: Vitalik Buterin could have fueled Shiba Inu price rally by burning $1.7 billion in SHIB
MakerDAO receives proposal to spend $100 million on tokenized US Treasury bonds
The MakerDAO community expressed mixed feelings about Steakhouse’s proposal to allocate $100 million to development and testing of tokenized US Treasury bond products. The rationale provided by the strategic finance core member is that tokenized T-bill offerings have expanded since MakerDAO first expressed interest in February 2022.
Exploring asset-liability management in such products is key to MakerDAO’s success, according to Steakhouse. The contributors of the strategic finance core unit state that the $100 million allocation is only a first step in tokenized T-bill products.
Community members expressed two key concerns:
- $100 million is a large sum to invest in experimentation that is considered only preliminary or a “first step,” as described in the proposal
- Massive regulatory risk by paving the way for sanctioned individuals to freely access a T-Bill-backed instrument without a whitelisting process
The MakerDAO community members in favor of the proposal asked for specific criteria or benchmarks to measure the success of the project and a dedicated timeline for implementation.
MKR price faces selling pressure on centralized exchanges
MKR supply on exchanges dropped nearly 13% during the past weekend. However, based on data from crypto intelligence tracker Santiment, there has been a consistent increase in MKR supply on centralized exchanges this week.
MKR supply increased from 96,565 to 97,119 between September 4 and early on Friday. Typically, an increase in supply of the token fuels a bearish narrative for its price as larger volume of the asset is available for sale on centralized exchanges.
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MKR Supply on exchanges vs price
At the time of writing, MKR price is $1,140. he token is recovering from its August 31 intraday low of $1,031.
Bitcoin, altcoins, stablecoins FAQs
What is Bitcoin?
Bitcoin is the largest cryptocurrency by market capitalization, a virtual currency designed to serve as money. This form of payment cannot be controlled by any one person, group, or entity, which eliminates the need for third-party participation during financial transactions.
What are altcoins?
Altcoins are any cryptocurrency apart from Bitcoin, but some also regard Ethereum as a non-altcoin because it is from these two cryptocurrencies that forking happens. If this is true, then Litecoin is the first altcoin, forked from the Bitcoin protocol and, therefore, an “improved” version of it.
What are stablecoins?
Stablecoins are cryptocurrencies designed to have a stable price, with their value backed by a reserve of the asset it represents. To achieve this, the value of any one stablecoin is pegged to a commodity or financial instrument, such as the US Dollar (USD), with its supply regulated by an algorithm or demand. The main goal of stablecoins is to provide an on/off-ramp for investors willing to trade and invest in cryptocurrencies. Stablecoins also allow investors to store value since cryptocurrencies, in general, are subject to volatility.
What is Bitcoin Dominance?
Bitcoin dominance is the ratio of Bitcoin's market capitalization to the total market capitalization of all cryptocurrencies combined. It provides a clear picture of Bitcoin’s interest among investors. A high BTC dominance typically happens before and during a bull run, in which investors resort to investing in relatively stable and high market capitalization cryptocurrency like Bitcoin. A drop in BTC dominance usually means that investors are moving their capital and/or profits to altcoins in a quest for higher returns, which usually triggers an explosion of altcoin rallies.
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Author
Ekta Mourya
FXStreet
Ekta Mourya has extensive experience in fundamental and on-chain analysis, particularly focused on impact of macroeconomics and central bank policies on cryptocurrencies.
