MakerDAO is intensifying its strategic shift to embrace real world assets.
The Maker community will soon vote on whether to issue a 30M DAI loan to SG Forge — a blockchain-focused subsidiary of Societe Generale, the No. 3 bank in France with €1.5T ($1.5T) in assets.
French Home Loans
If passed, SG Forge will use the loan, worth $30M, to refinance €40M worth of bonds on its balance sheet.
The loan would be backed by OFH tokens, which are issued by Societe Generale and supported by corporate obligations and a pool of French home loans — both of which have AAA credit ratings.
The move comes as an on-chain governance poll appeared poised to close in favor of creating a 100M DAI vault for Huntingdon Valley Bank, a Pennsylvania lender.
MakerDAO Jolts its Members with Bold Governance Proposals
Huntingdon’s proposal will now be upgraded to an executive vote, which, if passed, will pave the way for the launch of Maker’s largest real world assets, or RWA, vault to date. It will also mark the protocol’s first collateral integration with a U.S. bank.
MakerDAO is a collateralized debt protocol that allows users to mint the decentralized stablecoin DAI against digital assets deposits. However, the DAO has recently pivoted to diversify its exposure outside of overcollateralized digital asset positions, moving to increase its integrations with companies that operate with real world assets, including real estate and financial institutions.
The Maker community also voted to allocate 400M DAI to short-term U.S. treasuries and 100M DAI to investment-grade corporate bonds to generate revenue for the protocol on July 4.
MakerDAO has already launched five RWA vaults, which are currently deploying 41.7M DAI combined.
Four vaults representing 27.5M DAI are the product of Maker’s partnership with Centrifuge, a Polkadot-based protocol allowing businesses operating with RWAs to access DAI-based financing.
Around 18.3M DAI worth of loans is backed by tokenized real estate via New Silver on Centrifuge, with 5.3M DAI backed by revenue-based financing assets through Fortunafi, 1.9M DAI backed by tokenized freight invoices via Consol Freight, and 1.8M backed by short-term trade receivables through Harbor.
A vault operated by the real estate financing firm 6s Capital has also deployed nearly 14.3M DAI for secured loans to commercial real estate developers throughout the United States.
The various pools earn annual returns of between 3% and 7% for MakerDAO, netting the protocol more than 1.5M DAI in revenue each year based on current utilization.
There are also early-stage proposals for vaults intended to finance the green energy projects of an Egyptian power plant, loans backed by tokenized U.S. real estate issued by the firm Robinland, and to fund Backed Finance’s creation of tokenized short-term Swiss bonds.
Timo Lehes, the co-founder and managing director of Swarm Markets, a DeFi trading platform based in Germany, said embracing real world assets is “critical” at such a fraught time in the market.
“This is an essential way for DeFi to reevaluate its value proposition in a period of market distress,” Lehes told The Defiant. “The sector needs to figure out, ultimately, why it is creating the infrastructure that is now in place in order to shift mindset from short-term speculation to long-term investment. RWAs are the clear answer to that.”
“No longer will it be a game of tokens,” he continued. “Instead it will mean real tangible assets such as company stocks, debt assets and even real estate will be able to exist, with a track record of ownership, on open, secure, and transparent blockchain.”
While MakerDAO’s governance has largely supported the protocols expanding RWA operations, not everyone in the community is happy about its strategic refocus.
Prominent developer Foobar described Maker’s RWA focus as “a terrible idea,” asserting that “DAI needs to stand on its own, without real-world risk factors being introduced for no reason.”
“You like RWA, fine. Go build a RWA protocol. But don’t vampire attack Maker under moral guises,” he continued.
Twitter user reformedDoge chimed in, warning against the risks associated with “using real-world centralized assets that can be frozen immediately by government and confiscated forever.”