MakerDAO has approved a governance vote to extend the debt cap of its direct deposit module to $1 billion for its stablecoin Dai, focusing on investments in Ethena ENA
+0.062%
This adjustment is part of a broader strategy to diversify MakerDAO’s collateral exposure – marking a major financial commitment to Ethena’s stablecoin and also allowing the protocol to generate additional returns for users.
An initial $600 million from MakerDAO’s Dai holdings will be allocated to these lending markets, highlighting the protocol’s commitment to Ethena’s USDe. This move is facilitated by MakerDAO’s Spark protocol, with a preference for allocations to USDe pools over those to sUSDe.
USDe, distinct from traditional stablecoins, operates 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 short sales of Ether futures, introducing a unique approach to supporting stablecoins. Its rise has sparked discussions within the crypto industry about the associated risks, particularly regarding USDe’s yield generation methods.
In response to MakerDAO’s latest allocation, there was a proposed call from an Aave contributor for a reassessment of Dai risk parameters in Aave’s loan markets, suggesting potential adjustments to loan-to-value ratios for Dai-based loans. Notably, Aave is a competitor to MakerDAO and Morpho.
Disclaimer: The Block is an independent media outlet providing news, research and data. Since November 2023, Foresight Ventures has been a majority investor in The Block. Foresight Ventures invests in other companies in the crypto space. Crypto exchange Bitget is an anchor LP for Foresight Ventures. The Block continues to operate independently to provide objective, impactful and current information about the crypto industry. Here is our current financial information.
© 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.