MakerDAO, a decentralized autonomous organization (DAO) tasked with the governance and issuance of the DAI stablecoin, on Thursday allocated $500 million for investment in short US Treasuries and corporate bonds.

According to the announcement, the strategic investment will see 80% of its over-collateralized DAI stablecoin converted into short-term US Treasuries and the remaining 20% ​​invested in corporate bonds. The move is intended to diversify MakerDAO’s balance sheet into scalable traditional financial investments, expand income streams, and limit exposure to any one asset.

European wholesale lender Monetalis is acting as advisor, while digital asset bank Sygnum is the lead partner in the $500 million diversification effort.

In June, MakerDAO voted on a proposal intended to help it weather the bear market and use untapped reserves by investing 500 million DAI stablecoins in a mix of US Treasury bonds and corporate bonds. The largest delegates at MakerDAO voted for the split allocation 80/20. They reasoned that the allocation would be beneficial to the Maker protocol in the long run in many ways, including its new exposure to major traditional financial institutions and learning how to manage finances in a bear market.

The DAO’s decision to invest such a large amount of funds was based on the recommendations of several members who believed that deploying unused funds could help increase the profitability of the protocol with minimal risk.

The development signals a strategy by a major digital asset firm to move beyond the crypto landscape and gain returns from traditional “safe” financial investments with its flagship cryptocurrency DAI stablecoin.

MakerDAO is the governing body of the Maker protocol, and Dai is a collateral-backed decentralized stablecoin on the Ethereum blockchain. The Maker protocol leverages Ethereum smart contracts to automate the collateralization and lending of its stablecoin (DAI), as well as providing other functionality from other cryptocurrencies.

The development is a good example of involving decentralized governance to give tainted algorithmic stablecoins more stability. In May, the Terra UST stablecoin, which was the fourth largest stablecoin in the market during that time, crashed and wiped out investors globally. In addition to tearing investors apart, the destruction of Terra renewed scrutiny of the entire cryptocurrency and stablecoin space.

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