Sid ⚡️ Profile picture
Aug 2 13 tweets 4 min read
1/ @MakerDAO just approved a proposal to allow two financial institutions to set up vaults & borrow DAI. This is one of the many ways Maker is opening the floodgates for Real World Assets. Let's dig into why this is huge for MakerDAO and the future of Defi 👇
2/ Over the last two years the DeFi economy has exploded with DeFi TVL hitting ~$250B at the end of 2021. But there is a massive disconnect between the legacy financial system & DeFi ecosystem. Most of the yield in DeFi is generated by purely crypto-economic activity.
3/ To help DeFi progress to the next stage it needs to bridge the gap to rest of the global economy & integrate Real World Assets (RWA.) RWA's are essentially any asset that exists outside of the crypto ecosystem - cash flows, equipment, real estate or other financial assets.
4/ The US real estate market is $3.7 trillion. The cash-flow secured lending market is over a trillion. Tokenizing these assets on chain allows businesses to take advantage of DeFi's innovation and DeFi investors to get a broader set of investment opportunities.
5/ MakerDAO is leading the charge with integrating RWA's in three unique ways:
- Lending to traditional financial institutions
- Partnering with Centrifuge to finance individual businesses
- Investing in liquid bond strategies
6/ Traditional Financial Institutions:
- MakerDAO has a deal with a 151yr old bank, Huntingdon Valley Bank, to lend out $100m with HVB originating mortgages, business loans amongst a variety of other lending activities.
7/ - French multi-national bank Société Générale’ has tokenized investment-grade bonds to post as collateral to take a $30m DAI loan

- Commercial lender 6s Capital, has borrowed ~$14m DAI and used the funds to finance a real-estate deal with Tesla!
8/ Centrifuge: MakerDAO has also partnered with @Centrifuge to make DeFi lending accessible to individual businesses. Centrifuge allows businesses to tokenize RWAs such as real-estate or other traditional financial assets to be used as collateral on Centrifuge's marketplace
9/ Tinlake currently has 12 businesses integrated with MakerDAO & borrowing ~86m in DAI with senior tranche loans yielding between ~2-11%. Centrifuge has also partnered up with DeFi's largest lending platform Aave to offer RWA yield to a broader customer base.
10/ 3) Allocating $500m to invest in liquid bond strategies. MakerDAO has $2.5B in USDC on its balance sheet that isn't earning yield and represents a concentrated position on their balance sheet.
11/ The DAO has decided to diversify their holdings by investing a portfolio of 80% US Short Treasuries and 20% IG Corp Bond and will be working with investment firm Baillie Gifford to execute the transactions.
12/ This bond portfolio will represent the fourth largest asset on MakerDao's balance sheet.
13/ While this is a penny in the vast bucket of traditional assets, these efforts are the first few valuable steps in connecting DeFi to the broader economy.

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