MakerDAO has opened a program to tokenize up to $1B in assets. The RWA program will depend on community proposals, with Maker having the final decision power.
MakerDAO will expand real-world asset (RWA) tokenization with an upcoming proposal program. The call for proposals will focus on teams trying to tokenize an asset and propose use cases within the DeFi ecosystem.
MakerDAO itself uses US T-bonds for its collaterals, aiming to expand available products as a source of secure liquidity. The tokenized assets must fit other products in the MakerDAO and Spark ecosystems. Spark is the first sub-DAO to launch on the Maker platform, aiming to extend the work of the core protocol.
Maker aims to bring new use cases for tokenized money markets and short-term T-Bills. The end goal is to transfer the short-term bond yield to token holders in the most efficient way. The teams will have to build a product with a predetermined permission level and local regulation considerations. The products will also be redeemable in other assets, such as DAI, USDT and USDC.
The application process will extend until September 20, followed by a selection period. MakerDAO expected interest from top DeFi firms, and even additional involvement from BlackRock.
The Tokenization Grand Prix has started!
The competition to onboard $1 billion in tokenized real-world assets to @MakerDAO is open to all innovators and issuers interested in competing to shape the future of tokenized public securities and their place in decentralized finance.… pic.twitter.com/4PsuvwBPDX
— Spark (@sparkdotfi) August 13, 2024
Various entities in the DeFi space have tokenized up to $2.9B in real-world assets, including bills and money markets. Top product creators include First Digital, Ondo Finance and Franklin Templeton. Some of the backers of tokenized RWA may also join Maker to create new products. Other RWA tokenizing platforms that have expressed interest in the tokenization include Securitize, Mountain Protocol and OpenEden.
T-bills, short-term debt and money markets are among the top traditional products to be tokenized, due to their predictable yield. Government securities currently back $1.82B in tokenized assets among several DeFi protocols. MakerDAO itself started accruing US T-Bill backing in the past year, as a more secure collateral compared to stablecoins.
MakerDAO continues to reshuffle collaterals
The changes in MakerDAO and the wider adoption of T-bill assets is part of the Endgame plan, a roadmap proposed by Rune Christensen, co-founder of Maker. The goal of the Endgame state is to make Maker more resilient to both market risk and regulations.
The move toward T-bills was a workaround for Maker to boost its revenues during the 2022-2023 bear market. Maker also holds other revenue-generating assets, including Ethereum, riskier lending protocols, and liquidity pools. The drive to traditional financial products is seen as a paradox by crypto maximalists, who see the shift as de facto using government-issued fiat. However, RWA tokenization has boosted the health of decentralized protocols, which continue to hold digital assets as collaterals.
MakerDAO expanded its RWA vaults gradually over the past year, while also holding additional crypto and traditional assets. The outstanding balance of DAI has also diminished, from more than 9B tokens at the peak of the bull market in 2021 to around 3.2B tokens in 2024.
Maker was one of the protocols that managed to unwind without severe crashes, by rolling over its bull market gains into risk-free assets. It now holds $4.79B in total value locked, down from a peak near $20B during the late 2021 bull market.
Recently, MakerDAO proposed a vote on a complete overhaul of its collateral ecosystem. Maker aims to unwind WBTC positions. The adjustment to the WBTC collateral arrives after security concerns based on the involvement of Justin Sun, founder of TRON DAO.
As a result, MakerDAO voted to reduce all WBTC-backed vaults to zero. The MKR native token will also transform its role and not absorb market turbulence. In case the Maker protocol becomes insolvent, the price drop will be reflected in the DAI stablecoin, leaving DAI holders to absorb losses.
MKR will be used to incentivize the creators of SubDAOs like Spark, offsetting the initial burn mechanism to avoid the creation of over-influential holders.
MKR tokens mostly correlate their price with ETH. MKR has been on the decline since its yearly market peak in April, when it was above $3,700. After the most recent market dip, the token traded at $1,980.20.
Cryptopolitan reporting by Hristina Vasileva
