MakerDAO Members Vote On $100M DAI Loans To US Bank

Key Takeaways

• The community has approved a proposal to incorporate a US bank into MakerDAO’s collateral system.
• The debt limit of the Huntingdon Valley Bank is $100 million. It will be possible to borrow the amount in DAI by securing an off-chain account with collateral.
• Five more real-world assets have been included in MakerDAO, and the governance board is now discussing further suggestions. Recently, the protocol decided to invest $500 million in DAI bonds.

MakerDAO will lend Huntingdon Valley Bank up to $100 million in DAI when it posts collateral to an off-chain account. It is the first time an American bank has joined the DeFi ecosystem.

Combining TradFi with DeFi

MakerDAO is taking measures to dominate the conventional financial sector.

The leading DeFi protocol’s DAO voted to join the Huntingdon Valley Bank to its Real-World Asset Maker Vaults, allowing MakerDAO to lend the Pennsylvania-based bank up to $100 million in DAI anytime it puts collateral into a specified off-chain account. A majority of 87.27% voted in support of the proposed plan.

#MakerDAO has passed a vote to approve a $100 million stablecoin loan vault for a 151-year-old US-based Huntingdon Valley Bank. The debt ceiling will start at $100 million and later be raised to $1 billion. pic.twitter.com/OyGCHQyi7Z

— Hong Kong girl (@BillMinazhou007) July 8, 2022

MakerDAO is a DeFi system based on Ethereum that enables users to mint the DAI stablecoin by depositing collateral. Most collateral customers can deposit consists of major digital currencies like Bitcoin and Ethereum. The approved application introduces a licensed US bank to the DeFi ecosystem.

Other real-world assets with varying debt limits have already been added to MakerDAO’s vaults. The protocol can lend up to $18 million in DAI secured by tokenised real estate, $14 million to commercial real estate developers, $5 million to buy US Revenue Based Financing assets, $2 million to tokenised freight invoices and $1.8 million to Short Term Trade Receivables. With the approval of the revised proposal, MakerDAO can now lend a total of $141 million in DAI against collateralised real estate assets.

The Huntingdon Valley Bank integration will be the most extensive protocol integration to date. The DAO is also considering allowing the French multinational investment bank Société Générale to borrow $30 million in DAI possibly. In addition, it intends to invest $500 million in Treasury bills and corporate bonds in DAI.

As its assets are collateralised off-chain rather than on Ethereum, the Huntingdon Valley Bank Vault is only cancelled by a governance vote.

The rising complexity of MakerDAO’s collateral system has lately generated a fiercely disputed proposal for the DAO to create an advisory council to provide MKR holders with guidance on future recommendations. The plan was defeated on June 27, with 60.17%t of votes cast against it and just 38.28% in favour.