MakerDAO Injects $100M Worth of RWAs via BlockTower Andromeda

Stablecoin issuer and decentralized finance protocol MakerDAO has added $100 million worth of Real-World Assets (RWAs) via BlockTower Andromeda over the last two days. These funds were predominantly allocated to short-term US Treasury bonds offering an attractive annual yield of 4.5%.

MakerDAO’s cumulative RWA assets currently stand at approximately $2.7 billion, based on data from Makerburn.

MakerDAO’s ‘Endgame Plan’

The latest acquisition is part of MakerDAO’s “Endgame Plan,” introduced by co-founder Rune Christensen last year. Over three years, DAI will maintain its peg to the dollar, during which the protocol will intensify its focus on RWA, aiming to acquire more Ether and thereby enhance the ratio of decentralized collateral.

The main aim is to diversify the assets backing the $5.3 billion dollar-pegged stablecoin by ramping up the role of traditional financial assets such as government bonds in the reserve.

“The Endgame Plan is a proposal to overhaul and improve the governance and tokenomics of the Maker Ecosystem. Its primary aim is for the ecosystem to reach a self-sustainable equilibrium called the Endgame State. In this state, the ecosystem is resilient, and the scope and complexity of Maker Core will no longer change.”

The move has helped MakerDAO despite a slowdown in the broader DeFi ecosystem. The protocol’s annualized revenue, for one, is nearing $150 million, a substantial portion of which is derived from RWAs. In fact, data from DeFiLlama revealed that MakerDAO’s revenue has increased more than 10x since it started purchasing treasury bonds in October 2022, from $31,300 earned daily to over $333,555 at the time of writing.

For the uninitiated, RWAs offer a means for traditional asset managers to tokenize their portfolios. As explained by Delphi Digital analyst Ashwath, their true value lies in their ability to leverage protocols like Maker for liquidity against these RWAs, thereby providing asset managers with an additional avenue to secure credit.

Recent data suggest that Maker currently earns around 70-80% of protocol revenue via stability fees against RWAs. The DeFi protocol’s RWA portfolio consists of multiple asset managers and a diverse range of debt instruments, including investment-grade bonds, short-term t-bill ETFs, business loans, etc.

Real-World Asset Tokenization Growth

In a recent study, the Boston Consulting Group (BCG) concluded that the tokenization of global illiquid assets could become a $16 trillion industry by 2030. Analysts are also predicting that this will serve as a driving force for mainstream crypto adoption.

Besides MakerDAO, some of the other crypto protocols dealing in real-world asset tokenization are GoldFinch, Centrifuge, TrueFi, and Maple Finance.