MakerDAO Opens $100M DAI Loan to Huntingdon Valley Bank

The MakerDAO loan to Huntingdon Valley Bank marks the first integration between a decentralized finance protocol and a traditional bank

article-image

DAI tokens | Source: Shutterstock

share

key takeaways

  • MakerDAO formally approved Huntingdon Valley Bank’s facility in July
  • The move is seen as an effort to diversify MakerDAO’s counterparty risks away from centralized crypto entities

MakerDAO has officially connected its native stablecoin DAI to traditional finance through a partnership with Huntingdon Valley Bank (HVB), a community bank in Philadelphia. 

The protocol announced today its formal offering to HVB of 100 million DAI, marking the “first commercial loan participation between a US Regulated Financial Institution and a decentralized digital currency.”

HVB sought the DAI to support the growth of existing businesses and investments in March, when it formally submitted a MakerDAO onboarding application. 

In return, MakerDAO will be able to diversify its counterparty risks and generate yields from its DAI holdings via HVB’s bond managers.

The initial loan is worth up to $100 million, with the first transaction opening up half of the total facility. HVB has the ability to request more capital over the next 12 months.

Loading Tweet..
MakerDAO celebrated its partnership with Huntingdon Valley Bank earlier today.

MakerDAO formally brought in HVB as a new stablecoin vault type in July with a governance vote, which garnered 87% approval — not long after the collapse of Terra and its algorithmic stablecoin UST. 

“As demand for crypto leverage is decreasing, rates in the real world are rising, so there’s an opportunity where Maker can mint DAI at a low cost of capital and lend it against really good, robust real-world assets at a higher rate,” TJ Ragsdale, who manages real-world assets at MakerDAO, told Blockworks in July

“Revenue coming from the real world can offset some of the revenue we’ve lost from crypto,” he said.

Not to mention, recent sanctions on crypto mixer Tornado Cash have caused members of the MakerDAO governance to become wary of its stablecoin being too reliant on centralized stablecoin issuers, particularly Circle.

Indeed, the protocol remains torn between ideologies of centralization and decentralization. But moves like these — facilitating loans to traditional finance — are all the more critical for MakerDAO moving forward.


Start your day with top crypto insights from David Canellis and Katherine Ross. Subscribe to the Empire newsletter.

The Lightspeed newsletter is all things Solana, in your inbox, every day. Subscribe to daily Solana news from Jack Kubinec and Jeff Albus.

Tags

Upcoming Events

Salt Lake City, UT

WED - FRI, OCTOBER 9 - 11, 2024

Pack your bags, anon — we’re heading west! Join us in the beautiful Salt Lake City for the third installment of Permissionless. Come for the alpha, stay for the fresh air. Permissionless III promises unforgettable panels, killer networking opportunities, and mountains […]

recent research

Screenshot 2024-05-23 091855.png

Research

Bitcoin L2s aim to boost scalability while preserving decentralization and security, unlocking a better user experience, and new avenues for Bitcoin-powered innovations. However, no existing Bitcoin L2 leverages the full security of Bitcoin.

article-image

Sponsored

As part of the #Breakout2024 plans, Radix has introduced Token Trek

article-image

House members ask Gensler to keep a “consistent and equitable approach” with ether ETF proposals after the agency approved spot bitcoin ETFs in January

article-image

Using old-world instruments to address crypto user experience challenges goes against what this industry set out to do

article-image

And, weeks of a potential crypto ETF decision are no stranger to chaos

article-image

The FIT21 Act marks the second crypto-focused piece of legislation to advance in Congress this month

article-image

More than half of Solana transactions fail