• MakerDAO’s community votes to stop landing to a tokenized credit pool after a $2.1 million loan default. 
• Harbor Trade credit pool minted $1.5 million of DAI backed by loans to a consumer electronic firm.

MakerDAO’s community, the DAI stablecoin issuer, has voted to stop lending to a tokenized credit pool after defaulting on a $2.1 million loan.  Harbor Trade credit pool, the embattled credit pool, accrued the $2.1 million loan on Centrifuge protocol.

The MakerDAO decision was made through a governance vote, with the members unanimously deciding to stop the Harbor Trade managed credit pool. Marker is a platform managed by a decentralized autonomous organization (DAO), and all MKR token holders have the power to participate in governance decisions. 

Stakeholders raised concerns regarding the existing debt limit and the potential risks of increasingly exposing the vault to lenders.  MakerDAO governance post said:

While Harbor Trade has verbally committed to cease additional draws and voluntarily wind down the vault, community members have expressed concern about the existing 7 million Debt Ceiling and the risk of potentially increasing exposure to this vault,”

DAI, Maker’s $4.6 billion stablecoin, is supported by debt collaterals from cryptocurrencies, and with time, tokenized bonds and loans increase to earn a profit. 

The Harbor Trade credit pool generated $1.5 million worth of DAI stablecoin from MakerDAO ad backed them with loans made to a consumer electronics firm. The borrower firm defaulted on the $2.1 million loan that became delinquent in April 2023. According to MakerDAO, Harbor Trade is “actively engaged in the workout process” and forecasts “a meaningful or full recovery,” but the process might take up to six months or more. However, HTC cannot provide additional information on how it plans to offset the loan since the workout process is highly confidential.

Harbor Trade has verbally committed to halt additional draws and willingly wind down the vault. However, community members and decision-makers are concerned about the existing 7mm Debt Ceiling and the risk of continuing the agreement. 

There is a mixed market sentiment about MakerDAO. There is a negative sentiment related to the defaulted loans news and concerns within the community regarding the defaulting tokenized credit pool. However, the negative sentiment is being neutralized by the total value locked (TVL) stagnation in the decentralized finance (defi) sector and MakerDAO’s revenue generated from real-world assets. 

There is also a positive sentiment from MakerDAO’s optimistic price predictions, ability to gain from the growth of specific sectors, and the protocol’s efforts to create multiple sources of income and reduce dependency on a single asset. 

Whale accounts amassing stablecoin DAO and Bitcoin have generated significant interest in MakerDAO’s protocol. Almost 80% of MakerDAO’s fee revenue over the last twelve months was generated from real-world assets (RWAs).

There is an increase in wstETH interest in MakerDAO vaults, showing the ability of the protocol to cater to community members seeking exposure to staking rewards.