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MakerDAO Invests in Government Treasuries  

The TradFi and DeFi rivalry rhetoric turns amicable as MakerDAO is all set to circumvent the bear market by investing in the combination of US Treasuries and Bonds. The DAO governance has raised a signal request which would allow investing funds of 500 million into government treasuries and bonds in the ratio of 80:20. 

80% earmarked for treasuries; whereas, 20% for the bonds. DAI has been sluggish in the bear market and the protocol wants to make the most from the reserves. As a result, the protocol aims at earning yields from traditional investment vehicles through community voting

What Does MakerDAO Decision Mean For Crypto Space? 

Apparently, the Fed will continue raising interest rates throughout this year. Such interest rate hikes will compel corporations to sell risky assets to pay back loans. So, it is very likely that the market will be further seeing a downside and most of the crypto protocols will duplicate the same  step of MakerDAO likely. The reason for the same is when the Fed increases interest rates, it becomes tough to do business. The cost of borrowing is at its highest point. Traders and investors would be pulling out the funds and investing in stable portfolios like bonds and debentures. This would be negatively impacting the crypto market. 

The Way Forward

However the Fed cannot continue their aggressive stance for a longer time period. The reason being higher interest rates will make doing business non conducive. As a result, employment generation will dip. The Fed will sooner release the employment index and if everything is fine, they will continue raising the interest rates. However, MakerDAO’s 500 million investment shouldn’t be taken as an event signaling liquidation anytime soon. MakerDAO’s Strategic Finance Core Unit Sebastien Derivaux said, “An investment of 500M DAI in this context, that is expected to remain liquid and low volatility, is therefore not a significant risk for the DAI peg nor the solvency of MakerDAO.”

Crypto products and NFTs are unregulated and can be highly risky. There may be no regulatory recourse for any loss from such transactions. Crypto is not a legal tender and is subject to market risks. Readers are advised to seek expert advice and read offer document(s) along with related important literature on the subject carefully before making any kind of investment whatsoever. Crypto market predictions are speculative and any investment made shall be at the sole cost and risk of the readers.