France-based multinational financial services giant Société Générale has withdrawn $7 million in the cryptocurrency-backed stablecoin DAI from MakerDAO, out of a vault that has a debt ceiling of $30 million in DAI.
As The Block reports, Société Générale was approved to start a MakerDAO vault last year after a vote from the decentralized autonomous organization’s (DAO) members approved its creation. After several months of inactivity, the financial services giant has withdrawn $7 million in DAI.
The vault from which the funds were taken lets Société Générale borrow up to $30 million in the cryptocurrency from Maker. The firm initially took a $30 DAI loan before taking out the larger chunk. Its annual fees are 3.5%.
The loan is backed by covered home loan bonds worth $40 million that were issued by Société Générale. The move is seen as an example of how traditional finance players can leverage decentralized finance.
DAI, it’s worth noting, is a stablecoin that was initially backed by Ethereum (ETH). In 2019, the Maker protocol migrated to a new system to create multi-collateral DAI, backed by several cryptocurrencies instead of just ETH.
Maker itself has over the past year been moving to diversify its treasury and balance sheet with real-world assets, effectively diversifying the collateral backing DAI and reducing the system’s reliance on cryptocurrencies.
MakerDAO has been notably gradually investing $500 million into short-term U.S. Treasury bonds and investment-grade corporate bonds, which brings in additional revenue to the protocol as interest rates rise.
At the time of writing, U.S. Treasury bond yield for Treasurys with maturities up to one year range from 4.4% for 1-month bonds to 4.79% for 6-month bonds.
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