• Maker looking to buy treasuries to make a strategic investment in Ethereum (ETH).
• The founder’s ‘endgame’ is still in play as the project looks to cut ties from all centralized assets, projects, and companies.

Maker, the Ethereum-based protocol backing the DAI stablecoin, is venturing deeper into centralized finance by purchasing US Treasuries to eventually buy Ethereum (ETH). In June, the MakerDAO voted to invest a total of $500 million into US Short Treasuries and IG Corp Bond. The vote specified that Maker will spend 80 percent, or $400 million, on Treasuries. The DAO has now voted to kickstart the purchases with an allocation of 1 million DAI. 

According to Maker, the Debt Ceiling will increase from 1 million DAI to 250 million DAI if the pilot transaction is successful. According to an official publication back in June, Maker believes that US Treasury yields provide sufficient fixed-income returns despite fears of looming inflation.

Overall we believe the economic outlook remains healthy, as consumers have strong ‘balance sheets,’ and businesses are reinvesting as Covid finally [dissipates].

Maker also involved with Gemini and Coinbase

Maker is buying the Treasuries and corporate bonds from investment and risk management giant BlackRock. In addition to BlackRock, the protocol is also working with asset management platform Coinshares, and crypto exchanges Coinbase and Gemini.

Last month, Coinbase offered Maker 1.5 percent in earnings if the protocol deposits $1.6 billion worth of USDC on Coinbase Institutional. Furthermore, Coinbase says there would be no lock-up period and no custody fees for holding the USDC. The funds will be channeled from MakerDAO’s Peg Stability Module (PSM) smart contract. The PSM performs several functions for MakerDAO, including maintaining the DAI’s parity with the dollar.

Gemini also made MakerDAO a similar offer. The crypto exchange said it would pay Maker 1.25 percent on any GUSD – Gemini’s stablecoin – in the PSM. In a message to the Maker community, CEO Tyler Winklevoss said that the rate would be calculated and paid monthly as long as the average monthly balance is at least $100 million GUSD on the last day of each month.

Criticism and Endgame

Maker is generally trying to earn some revenue from its reserves. As part of a Declaration of Intent published in February, Maker noted that it was looking to make money and also fix bad PR. The document indicated that at the time, 60 percent of MakerDAO’s balance sheet was in stablecoins, adding that it had been at 50 percent for the previous 18 months.

Maker has received its fair share of criticism for continuous exposure to USDC. Although it will de-peg from the stablecoin, Maker is playing the long game. According to founder Rune Christensen, the eventual plan – called the Endgame – is to cut ties with any centralized assets that authorities can ban or control, including Treasuries and USDC. This problem seems born out of the recent government sanction on Tornado Cash.

Currently, Maker wants to maximize every opportunity it has to generate income. Christensen calls this the “Pigeon Stance” phase, named after the bird’s evolutionary confidence around humans, which helps it scavenge food. Maker’s relationship with USDC, Gemini, Treasuries, and bonds, is to make as much money as it can and then use the funds to purchase ETH in large quantities. This is so that the protocol has censorship-resistance funds to keep running in case it becomes a government target.