Pennsylvania-Based Bank Approved For Leveraging Makerdao’s Stablecoin Vault

The decentralized autonomous organization (DAO) called MakerDao is responsible for issuing the DAI stablecoin. It recently gave approval to a governance proposal that will use a US-based bank for collateral integration. More than 87% of votes were in favor of the Makerdao governance proposal and this means that a stablecoin vault would be leveraged by the Hungtingdon Valley Bank, which is based in the United States.

Bank to use Makerdao’s Stablecoin vault

According to a breakdown of a governance poll of Makerdao, a collateral integration proposal with the financial institution based in Pennsylvania called Huntingdon Valley Bank had received the approval of the community.

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The proposal had first been brought up for discussion on July 4th, 2022 and it had noted that this concept would certainly be the first one to be introduced in the world of decentralized finance (DeFi). The proposal was called RWA-009 and this term stands for ‘real-world assets’.

The official Twitter account of the project said that the first collateral integration in the defi ecosystem with a bank based in the US was drawing closer. The team said that the Huntingdon Valley Bank had proposed the RWA-009, which was a debt ceiling participation facility worth 100 million DAI stablecoins.

The details

Makerdao had published a thread on Twitter at the end of March in which it shed some light on how this scheme would operate. It said that the Pennsylvania-based bank would be able to use its participated loans as collateral for borrowing DAI.

At that time, Makerdao had said that there had been a request of keeping the initial debt ceiling at $100 million that would be deployed in a period of a year to two years. Moreover, Makerdao also disclosed that there was no doubt that Huntingdon Valley Bank would be the first to enter the ‘Master Purchase Agreement’.

However, it said that they also intended to add more banks to it in the future. The stablecoin of the project, which is called DAI, has a market capitalization of about $6.48 billion and this makes it the fourth-largest stablecoin in the market.

Makerdao’s presence

In the last week, there has been a 2.5% rise in the native crypto asset of Makerdao called MKR against the US dollar, but there has been an annual decline of 65%. In 2020, the native crypto had reached its all-time lowest value of $168, but it has recorded an increase of 448% to reach $921 per unit.

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As far as dominance in the DeFi marketplace is concerned, Makerdao’s total value locked is about 10% of the total TVL of the ecosystem, which is $75.54 billion. At the time of writing, the TVL of the Makerdao protocol is about $7.56 billion, which has seen a fall of 4.38% in the last month.

The recently approved proposal is in accordance with the plans of the Makerdao protocol announced at the end of April to introduce L2 scaling support. The community members have expressed their interest in leveraging real-world assets for quite some time.