Maker

MakerDAO passes proposal for $750M increase in US Treasury investments

The emergency proposal increases MakerDAO’s holdings of United States bonds by 150%, aiming to diversify the Dai stablecoin’s collateral exposure.

Lending protocol and stablecoin issuer MakerDAO passed a proposal on March 16 to increase its portfolio holdings of United States Treasury bonds by 150%, from $500 million to $1.25 billion.

The proposal aims to increase the protocol’s exposure to real-world assets and “high-quality bonds,” following its Dai (DAI) stablecoin losing its $1 peg during market volatility on March 11. The $750 million debt ceiling hike was approved by 77% of Maker’s delegates. A representative of MakerDAO told Cointelegraph:

“Under this new deployment, MakerDAO would use $750 million of USDC in the PSM to purchase more US Treasury bonds, thus diversifying its liquid assets that back DAI.”

The bonds will be purchased with equal maturities, biweekly and over a six-month period, totaling 12 slots of $62.5 million each. Under the strategy, MakerDAO said it expects to deliver a net annualized yield of 4.6% to 4.5% after custody. Maker’s revenue stream could also be boosted by trading costs, the proposal noted.

Maker’s new strategy ladder for the next six months. Source: MakerDAO

The proposal would allow Maker “to take advantage of the current yield environment, and generate further revenue on Maker’s PSM Assets, in a flexible, liquid, manner,” it read. Federal Reserve data shows that Treasury’s yields for 10-year constant maturity were at 3.64% on March 14.

*Market yield on U.S. Treasury securities at 10-year constant maturity: Source FRED*

The move is an extension of a current $500 million U.S. Treasury allocation managed by decentralized finance (DeFi) asset adviser Monetalis Clydesdale since October 2022. “As of January 2023, this investment strategy has brought ~$2.1 million in lifetime fees,” MakerDAO claimed.

Participants in the governance forum, however, said that “Maker has not yet received any payment from the first half billion DAI” from Monetalis. Delegates also complained that questions in Maker’s Discord and governance forum were not answered promptly, thus not offering enough time to analyze the proposal.

On March 11, the collapse of Silicon Valley Bank spread panic across markets and led to the depeg of several stablecoins, including USD Coin (USDC) and Dai. In a March 13 Twitter thread about the volatility, MakerDAO noted that its community was working on proposals to switch its stablecoin exposure to money market investments, such as U.S. Treasurys, “with the purpose of diversifying DAI’s liquid collateral.”

EOS, STX, IMX and MKR show bullish signs as Bitcoin searches for direction

BTC price is attempting to stage a recovery, while EOS, STX, IMX and MKR are beginning to flash bullish signals.

The United States equities markets made a strong recovery this week but Bitcoin (BTC) failed to follow suit. This means that cryptocurrency investors stayed away and could be worried by the ongoing problems at Silvergate bank. These fears could be what is behind the total crypto market capitalization dropping to nearly $1 trillion.

The behavior analytics platform Santiment said in a report on March 5 that there was a “huge spike of bearish sentiment,” according to their bullish versus bearish word comparison Social Trends chart. However, the firm added that the “kind of overwhelmingly bearish sentiment can lead to a nice bounce to silence the critics.”

*Crypto market data daily view. Source:* *Coin360*

Another short-term positive for the crypto markets is the weakness in the U.S. Dollar Index (DXY), which fell by 0.70 in the past 7 days. This suggests that crypto markets may attempt a recovery over the next few days. As long as Bitcoin remains above $20,000, select altcoins may outperform the broader markets.

Let’s study the charts of Bitcoin and the four altcoins that are showing promise in the near term.

BTC/USDT

Bitcoin plummeted below the $22,800 support on March 3. Buyers tried to push the price back above the breakdown level on March 5 but the long wick on the candlestick suggests that bears are trying to flip $22,800 into resistance.

The 20-day exponential moving average ($23,159) has started to turn down and the relative strength index (RSI) is below 44, indicating that bears are trying to solidify their position. Sellers will try to sink the price below the support at $21,480. If they can pull it off, the BTC/USDT pair may retest the vital support at $20,000.

If bulls want to prevent the downside, they will have to quickly thrust the price above the 20-day EMA. Such a move will suggest aggressive buying at lower levels. The pair may then rise to $24,000 and thereafter rally to $25,250. A break above this resistance will indicate a potential trend change.

*BTC/USDT 4-hour chart. Source: TradingView*

The moving averages are turning down on the four-hour chart and the RSI is near 39. This indicates that bears have the upper hand. If the price turns down from the 20-dayEMA and breaks below $21,971, the pair may retest the support at $21,480.

Instead, if bulls drive the price above the 20-EMA, it will suggest that the bears may be losing their grip. The pair could then climb to the 50-day simple moving average. This is an important level for the bears to defend because a break above it may open the gates for a rally to $24,000.

EOS/USDT

EOS (EOS) broke above the vital resistance of $1.26 on March 3 but the bulls could not sustain the higher levels. However, a positive sign is that the price has not dropped below the 20-day EMA ($1.17).

The gradually upsloping moving averages and the RSI in the positive zone indicate advantage to the bulls. The EOS/USDT pair has formed a rounding bottom pattern that will complete on a break and close above the $1.26 to $1.34 resistance zone. This reversal setup has a target objective at $1.74.

The important support to watch on the downside is the 50-day SMA ($1.10). Buyers have not allowed the price to tumble below this support since Jan. 8, hence a break below it may accelerate selling. The next support on the downside is $1 and then $0.93.

*EOS/USDT 4-hour chart. Source: TradingView*

The bears pulled the price below the 20-EMA but a minor positive is that bulls have not allowed the pair to slide to the 50-SMA. This suggests that lower levels continue to attract buyers. If the price rises above the 20-EMA, the bulls will again try to clear the hurdle at $1.26. If they do that, the pair may surge to $1.34.

This positive view could invalidate in the near term if the price turns down and breaks below the 50-SMA. That may extend the fall to $1.11.

STX/USDT

Stacks (STX) rallied sharply from $0.30 on Feb. 17 to $1.04 on March 1, a 246% rise within a short time. Typically, vertical rallies are followed by sharp declines and that is what happened.

The STX/USDT pair plunged to the 20-day EMA ($0.69), where it is finding buying support. The 50% Fibonacci retracement level of $0.67 is also close by, hence the bulls will try to protect the level with vigor. On the upside, the bears will try to sell the rallies in the zone between $0.83 and $0.91.

If the price turns down from this overhead zone, the sellers will again try to deepen the correction. If the $0.67 cracks, the next support is at the 61.8% retracement level of $0.58.

Contrary to this assumption, if buyers thrust the price above $0.91, the pair may rise to $1.04. A break above this level will indicate a possible resumption of the uptrend. The pair may then rally to $1.43.

*STX/USDT 4-hour chart. Source: TradingView*

The four-hour chart shows that the 20-EMA is sloping down, and the RSI is in negative territory, indicating that bears have a slight edge. Sellers are likely to defend the moving averages during pullbacks. They will try to maintain their hold and sink the price to $0.65 and then to $0.56. The bulls will try to fiercely defend this support zone.

The first sign of strength will be a break and close above the 50-SMA. The pair may then rise to $0.94 and later to $1.04.

IMX/USDT

ImmutableX (IMX) rebounded off the 50-day SMA ($0.88) on March 3 and closed above the 20-day EMA ($1), indicating solid demand at lower levels.

The IMX/USDT pair could rise to $1.12 where the bears will again try to stall the recovery. If buyers bulldoze their way through, the pair could accelerate toward the stiff overhead resistance at $1.30. This is a crucial level to keep an eye on because a break and close above it may signal the start of a new uptrend. The pair may then soar to $1.85.

Contrarily, if the price turns down from the current level or $1.12, it will suggest that the bears have not yet given up. Sellers will then again try to sink the pair below the 50-day SMA and gain the upper hand. If they succeed, the pair could slump to $0.63.

IMX/USDT 4-hour chart. Source: TradingView

The four-hour chart shows the price is oscillating between $0.92 and $1.12. Usually, in a range, traders buy near the support and sell close to the resistance. The price action inside the range could be random and volatile.

If the price rises above the resistance, it suggests that the bulls have overpowered the bears. The pair may then rally toward $1.30. On the contrary, if bears sink the price below $0.92, the pair may turn negative in the near term. The support on the downside is at $0.83 and next at $0.73.

MKR/USDT

After a short-term pullback, Maker (MKR) is trying to resume its up-move. This suggests that the sentiment remains positive and traders are viewing the dips as buying opportunities.

The upsloping moving averages and the RSI in the positive territory indicate that the path of least resistance is to the upside. If buyers sustain the price above $963, the MKR/USDT pair may start its journey to the $1,150 to $1,170 resistance zone.

If bears want to stall the bullish trend, they will have to pull the price below the 20-day EMA ($807). If they manage to do that, stops of several short-term traders may be hit. The pair may then decline to the 50-day SMA ($731).

MKR/USDT 4-hour chart. Source: TradingView

The pair had been trading between $832 and $963 for some time but the bulls are trying to kick the price above the range. The 20-EMA has turned up and the RSI is in the positive territory, indicating that bulls are in command.

If the price sustains above $963, the pair may attempt a rally to the target objective of $1,094. On the other hand, if the price turns down sharply below $963, it will suggest that the breakout may have been a bull trap. That could extend the consolidation for a while longer.

The views, thoughts and opinions expressed here are the authors’ alone and do not necessarily reflect or represent the views and opinions of Cointelegraph.

This article does not contain investment advice or recommendations. Every investment and trading move involves risk, and readers should conduct their own research when making a decision.

Market maker Keyrock closes $72 million in Series B funding round

Investors in the round included Ripple, SIX Fintech Ventures and Middlegame Ventures.

Digital asset market maker Keyrock has raised $72 million in a Series B round of funding, according to an announcement on Nov. 30. Ripple, SIX Fintech Ventures and Middlegame Ventures are among the investors in the round.

Funds are planned to be used on Keyrock infrastructure development and scalability tools, as well as regulatory licensing across Europe, the United States and Singapore.

Keyrock CEO Kevin de Patoul said the company has been focused on a long-term perspective for its business in the past five years. He also noted that:

“The new round of funding allows us to expand on that and dramatically accelerate executing our vision to provide liquidity solutions for all digital assets. By doubling down on our focus on clients and scalability, we will be looking to expand into new markets with targeted services.”

Founded in 2017, Keyrock was also co-founded by Jeremy de Groodt and Juan David Mendieta and provides liquidity to over 85 decentralized and centralized trading platforms. According to the company, it provides liquidity to over 85 decentralized and centralized trading platforms and has expanded into 200 new markets in the past year, resulting in a threefold increase in trading volume while the overall market shrank in the past months.

Maxime Fages, director of Institutional Markets at Ripple, said that Keyrock has been providing scalable liquidity solutions to Ripple for three years. “Under the leadership of Kevin, Jeremy and Juan, Keyrock has established themselves as a key player in the space by building scalable, enterprise grade solutions and taking a regulatory first approach,” he noted.

The Brussels-based company also targets to double the size of its workforce globally, which currently is formed by over 100 employees, despite the market conditions.

Earlier this month, Cointelegraph reported how crypto companies, including crypto exchanges, venture capital firms and blockchain developers, have been forced to reduce headcount to stay nimble amid the bear market.

Transit Swap ‘hacker’ returns lion’s share of $23M in stolen funds: Finance Redefined

Majority of the DeFi tokens in Top-100 traded in red barring a few, thanks to the weekend rout in the market correction towards the end of the week.

Welcome to Finance Redefined, your weekly dose of essential decentralized finance (DeFi) insights — a newsletter crafted to bring you significant developments over the last week.

The TranitSwap hacker that got away with $23 million has returned 70% of the stolen funds. The return was possible due to quick actions from on-chain data analytic firms who managed to find the hacker’s IP address and other personal details.

Another research report from Elliptic suggests that DeFi bridges and decentralized exchanges (DEX) have become a new frontier for crypto laundering.

Bitcoin.com CEO Dennis Jarvis believes that Bitcoin can be a bridge that leads users to the decentralized finance space.

As the United States dollar strengthens, even DeFi protocols are looking to invest in the USD as MakerDAO announced it is going ahead with its $500M investment in Treasury bonds.

The top 100 DeFi tokens by market cap had a mixed week in terms of price action, where a majority of the tokens traded in the red thanks to a weekend market correction. However, a few tokens managed to remain in the green on the weekly charts.

Transit Swap ‘hacker’ returns 70% of $23M in stolen funds

A quick response from a number of blockchain security companies has helped facilitate the return of around 70% of the $23 million exploit of the DEX aggregator Transit Swap.

The DEX aggregator lost the funds after a hacker exploited an internal bug on a swap contract on Oct. 1, leading to a quick response from the Transit Finance team along with security companies Peckshield, SlowMist, Bitrace and TokenPocket, who were able to quickly work out the hacker’s IP, email address and associated-on chain addresses.

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‘New frontier’ of crypto laundering involves cross-chain bridges and DEXs: Elliptic

New research from blockchain analytics and crypto compliance firm Elliptic has revealed the extent to which cross-chain bridges and DEXs have removed barriers for cybercriminals.

In an Oct. 4 report titled “The state of cross-chain crime,” Elliptic researchers Eray Arda Akartuna and Thibaud Madelin took a deep dive into what they described as “the new frontier of crypto laundering.” The report summarized that the free flow of capital between crypto assets is now more unhindered due to the emergence of new technologies such as bridges and DEXs.

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Bitcoin can solve the DeFi onboarding crisis, argues exec

As the decentralized finance space remains plagued with hacks, people have become less interested in jumping in and engaging with DeFi. But, according to Dennis Jarvis, the CEO of Bitcoin.com, there is a way for DeFi adoption to move forward through Bitcoin.

In a keynote speech at the Blockchain Economy Dubai Summit 2022, Jarvis pointed out that massive losses of investor funds, like the collapse of Terra and the Axie Infinity Ronin hack, have made DeFi unappealing to potential users. However, the executive believes that by using Bitcoin as a hook, DeFi can overcome the onboarding crisis brought about by its declining reputation.

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MakerDAO goes ahead with $500M investment in treasuries and bonds

MakerDAO, the governing body of the Maker Protocol, has taken the first step of its plan to reallocate $500 million of its stablecoin Daicollateral reserves into the short-term United States Treasury and corporate bonds.

The decentralized autonomous organization (DAO) voted on Oct. 6 to approve a pilot transaction of $1 million following an executive vote from Maker tokenholders, with the rest of the funds soon to be reallocated following confirmation from the community.

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DeFi market overview

Analytical data reveals that DeFi’s total value locked registered a minor decrease from the past week. The TVL value was about $52.63 billion at the time of writing. Data from Cointelegraph Markets Pro and TradingView show that DeFi’s top 100 tokens by market capitalization had a mixed week, with many tokens seeing a decline toward the end of the week while a few others managed to trade in green.

Maker (MKR) continued its bullish momentum into October, registering a 9.78% gain over the past seven days, followed by Uniswap (UNI) with an 8.8% gain. Curve Finance (CRV) registered an 8% gain on the weekly charts as well.

Thanks for reading our summary of this week’s most impactful DeFi developments. Join us next Friday for more stories, insights and education in this dynamically advancing space.

MakerDAO co-founder recommends DAI-USD depegging to limit attack surface

While revealing the protocol’s inability to comply with regulators, Christensen suggested that “we must choose the path of decentralization.”

In light of the recent discussions around depegging its native token from USD Coin (USDC) amid sanctioning of Tornado Cash, MakerDAO co-founder Rune Christensen reached out to the community explaining why free-floating Dai (DAI) may be the only choice for the decentralized autonomous organization (DAO).

In his blog post, “The Path of Compliance and the Path of Decentralization: Why Maker has no choice but to prepare to free float Dai,” Christensen disclosed miscalculating the risks related to risk-weighted assets (RWA). He stated:

“Physical crackdown against crypto can occur with no advance notice and with no possibility of recovery even for legitimate, innocent users. This violates two core assumption that we used to understand RWA risk, making the authoritarian threat a lot more serious.”

While revealing the protocol’s inability to comply with regulators, Christensen suggested that “we must choose the path of decentralization, as was always the intent and the purpose of Dai.”

*DAI collateralization data. Source: Dai Stats*

He believes that decentralizing Maker would reduce the impact of crackdowns on the overall protocol, adding that “The only choice is then to limit attack surface by reducing RWA exposure to a maximum fixed percentage of the total collateral – this requires free floating away from USD.”

It is important to note that over 50% of DAI is currently collateralized by USDC, as evidenced by daistats data.

Joey Santoro, the founder of the decentralized finance platform Fei Protocol, recommended revoking participation from Tribe DAO after reimbursing Fuze victims.

Previously, Rari Fuze hacker was offered a $10 million bounty for returning the $80 million worth of assets, but Fei Protocol received no response from the attacker.

Top 5 cryptocurrencies to watch this week: BTC, FLOW, THETA, QNT, MKR

Select altcoins such as FLOW, THETA, QNT and MKR could rally if Bitcoin breaks above the stiff overhead resistance at $24,668.

The United States jobs data on Aug. 5 was above market expectations, indicating that inflation has not cooled down. The strong numbers reduce the possibility that the U.S. Federal Reserve will slow down its aggressive pace of rate hikes. After the release, the likelihood of a 75 basis points hike in September has risen to 68%, according to CME Group data.

However, analysts at Fundstrat Global Advisors have a different view. They highlighted that three out of six times, the S&P 500 bottomed out six months before the Fed’s last rate hike. Therefore, the firm anticipates the S&P 500 to witness a strong rally to 4,800 in the second half of the year.

If the tight correlation between the equities markets and the cryptocurrency markets maintain, the recovery in the crypto markets may have some more room to run. On-chain monitoring resource Material Indicators said in a Twitter update on Aug. 5 that if Bitcoin (BTC) rises above $25,000, there is no major resistance till the $26,000 to $28,000 range.

Could Bitcoin climb above the overhead resistance and extend its recovery, pulling select altcoins higher? Let’s study the charts of the top-5 cryptocurrencies that may outperform in the near term.

BTC/USDT

Bitcoin has been trading close to the 20-day exponential moving average (EMA) of $22,719 for the past few days, indicating a tough battle between the bulls and the bears. Although the bulls have held the level, they have not been able to achieve a strong rebound off it. This indicates a lack of demand at higher levels.

Both moving averages have flattened out and the relative strength index (RSI) is just above the midpoint, indicating a balance between buyers and sellers. The advantage could tilt in favor of the buyers if they push and sustain the price above $24,668.

If they manage to do that, the BTC/Tether (USDT) pair could rally to $28,000 and then to the next overhead resistance at $32,000.

Contrary to this assumption, if bears pull the price below the 20-day EMA, the pair could decline to the 50-day simple moving average (SMA) of $21,719. If this support also gives way, the next stop could be the uptrend line.

The price is stuck between $22,400 and $23,648 on the 4-hour chart. Both moving averages have flattened out and the RSI is near the midpoint, indicating a balance between supply and demand. If bulls drive the price above $23,648, the pair could rise to the overhead resistance at $24,668.

Conversely, if the price turns down and breaks below $22,400, it will tilt the short-term advantage in favor of the bears. The pair could then decline to the uptrend line, which could act as a strong support.

FLOW/USDT

The tight range trading in Flow (FLOW) resolved to the upside with the range expansion on Aug. 4. This indicates accumulation at lower levels and the start of a new up-move.

The bears are attempting to stall the up-move near $3.00 but a minor positive is that the bulls have not given up much ground. This indicates that traders are not hurrying to book profits after the recent rally.

The 20-day EMA of $2.07 has started to turn up and the RSI is near the overbought zone, indicating that bulls have the upper hand. If buyers drive the price above the $3.00 to $3.30 resistance zone, the FLOW/USDT pair could pick up momentum and rally toward $4.60.

*FLOW/USDT 4-hour chart. Source: TradingView*

The pair has turned down from the overhead resistance near $3.00 but is finding support at the 20-EMA on the 4-hour chart. If bulls push the price above $2.80, the pair could retest the overhead resistance at $2.99. A break above this level could signal the resumption of the uptrend.

Alternatively, if the price slips below the 20-EMA, the pair could drop to the 50% Fibonacci retracement level of $2.41, and then to the 61.8% retracement level of $2.27. A break below this level could tilt the advantage in favor of the bears and sink the pair to $2.00.

THETA/USDT

Theta Network (THETA) broke and closed above the stiff overhead resistance at $1.55 on Aug. 5, indicating that the range had resolved in favor of the bulls. The bears tried to sink the price back below the breakout level on Aug. 6 but the bulls held their ground.

The 20-day EMA of $1.39 has started to turn up and the RSI is in the positive territory, indicating advantage to buyers. If bulls sustain the price above $1.65, the THETA/USDT pair could start a new uptrend toward the pattern target of $2.10. This level may pose a strong challenge but if bulls clear this overhead hurdle, the pair could extend its rally to $2.60.

To invalidate this positive view, the bears will have to pull and sustain the price below $1.55. If that happens, the aggressive bulls may get trapped and the pair could slide to the moving averages.

*THETA/USDT 4-hour chart. Source: TradingView*

The 4-hour chart shows that the bulls purchased the dip to the 20-EMA, indicating buying on dips. Both moving averages on the 4-hour chart are sloping up and the RSI is near the overbought territory, indicating that the path of least resistance is to the upside. If bulls maintain the price above $1.65, the up-move may resume.

The first sign of weakness will be a break and close below the 20-EMA. If that happens, the pair could drop to the 50-SMA. The bears will have to sink the price below this level to signal that the uptrend may have ended in the near term.

QNT/USDT

Quant (QNT) made a strong recovery from its intraday low of $40 made on June 13. The bears tried to stall the up-move at $115 but the bulls aggressively purchased the dip below the 20-day EMA of $103 on July 26.

The bulls maintained their momentum and pushed the price above the overhead resistance at $115 on Aug. 6. This indicated the resumption of the uptrend. The QNT/USDT pair could rally to the overhead resistance zone between $154 to $162 where the bears may mount a strong defense.

Alternatively, if the price turns down from the current level, the bulls will attempt to flip the $115 level into support. If that happens, the pair could resume its uptrend. The bears will have to sink and sustain the price below the 20-day EMA to gain the upper hand.

*QNT/USDT 4-hour chart. Source: TradingView*

The pair is in an uptrend but the RSI on the 4-hour chart jumped into the overbought territory, indicating the possibility of a near-term correction. The bulls are expected to buy the dips to the 20-EMA. If they do that, it will suggest that the sentiment remains positive and traders are buying on dips. That will increase the likelihood of the resumption of the uptrend.

On the contrary, if the price turns down from the current level and breaks below the 20-EMA, the pair could slide to the 50-SMA. This is an important level to keep an eye on because a break below it could result in a fall to $100.

MKR/USDT

Maker’s (MKR) recovery is facing stiff resistance near $1,100 but a positive sign is that the bulls have not allowed the price to dip below the 20-day EMA of $1,044.

The moving averages are sloping up and the RSI is in the positive territory, indicating that buyers have the upper hand.

If bulls push and sustain the price above the overhead resistance zone between $1,100 and $1,188, the MKR/USDT pair could rally to $1,400 and then to the pattern target of $1,570. Such a move will suggest that the pair may have bottomed out.

Contrary to this assumption, if the price turns down from the overhead resistance and breaks below the 20-day EMA, the pair could slide to the trendline. A break and close below this level will invalidate the bullish setup.

The pair has formed a symmetrical triangle on the 4-hour chart. The 20-EMA is sloping up gradually and the RSI is in the positive zone, indicating a slight advantage to the bulls.

If buyers drive the price above the resistance line, the pair could rally to the overhead resistance at $1,188. A break and close above this level could indicate the resumption of the uptrend.

Conversely, a break below the support line of the triangle could tilt the advantage in favor of the sellers. The pair could then decline to the psychological level at $1,000.

The views and opinions expressed here are solely those of the author and do not necessarily reflect the views of Cointelegraph.com. Every investment and trading move involves risk, you should conduct your own research when making a decision.

MakerDAO voting on collaborating with a traditional bank

The Maker Protocol could extend yet another arm into the traditional finance space if a proposed integration with a Pennsylvania-based bank passes this week.

MakerDAO is voting on a proposal that will bring a traditional bank into its ecosystem for the first time, allowing the bank to borrow against its assets using decentralized finance (DeFi).

Currently 83% of voters are in favor of the proposal. Voting ends at 12:00 pm EST on July 7.

The proposal involves creating a vault with 100 million Dai (DAI) for Huntingdon Valley Bank (HVB) as part of a new collateral type in the Maker Protocol.

This will essentially allow the Maker Protocol to begin issuing real-world loans to borrowers through a fully backed traditional institution by meeting the bank’s standards.

The first collateral integration from a US-based bank in the DeFi ecosystem is getting closer.

The Maker Governance votes to add RWA-009, a 100 million DAI debt ceiling participation facility proposed by the Huntingdon Valley Bank, as a new collateral type in the Maker Protocol pic.twitter.com/fOdusdjCFS

— Maker (@MakerDAO) July 4, 2022

The move to integrate the bank follows hot on the heels of another decision to become more closely entwined with traditional finance after MakerDAO members voted in favor of spending $500 million DAI investing in treasuries and corporate bonds last week.

MakerDAO governs the Maker Protocol, which issues United States dollar-pegged DAI stablecoins in exchange for user deposits of Ether (ETH) and nearly 30 other cryptocurrencies. Huntingdon Valley Bank is a traditional bank from Pennsylvania founded in 1871.

The deal with HVB is important for the Maker Protocol because it is not currently allowed to issue U.S. dollar loans directly to borrowers. However, a special entity will be established by MakerDAO to make integration with the traditional bank possible.

First, a Multi-Bank Participation Trust (MBPTrust) will be established by MakerDAO in Delaware to link the capital available at HVB with the Dai stablecoin that Maker provides.

The trust would ensure that DAI minting and destruction from the vault is carried out properly and would manage commercial issues with HVB.

At first, HVB would own 50% of the loans issued through this scheme but would petition MakerDAO to incrementally reduce its ownership down to a minimum of 5%. The remainder would be owned by MBPTrust. This measure would mitigate the bank’s risks as it would essentially be issuing loans through the Maker Protocol under Pennsylvania law.

Maker Protocol, which has been trying to find strategies to weather the bear market, would be able to earn revenues through vault stability fees associated with maintaining the vault and minting DAI.

Revenue would also come from yield, which is estimated to be as much as 75 basis points above the 30-day average Secured Overnight Financing Rate (SOFR) of 0.083%.

HVB benefits by effectively increasing its legal lending limit beyond $7 million per borrower.

Assuming the HVB integration is a success after a period of time, MakerDAO believes the same MBPTrust could be used to onboard other banks.

Celsius pays down 143M in DAI loans since July 1

The crypto lender’s liquidation price on its Bitcoin loan has dropped to less than $5,000, according to DeFi industry data.

Celsius (CEL) has repaid a substantial amount of its outstanding debt to Maker (MKR) protocol since the beginning of the month, signaling that the troubled crypto lending platform was trying to stave off a complete collapse amid credible rumors of insolvency.

Since July 1, Celsius has repaid $142.8 million worth of Dai (DAI) stablecoins across four separate transactions, according to data from DeFi Explorer. The crypto lender still has $82 million in outstanding debt owed to Maker. Out of $1.8 billion in lifetime investments, the firm’s losses currently stand at $667.2 million.

With the loan repayments, Celsius’ liquidation price on its Wrapped Bitcoin (wBTC) loan has dropped to $4,966.99 Bitcoin (BTC). The liquidation price reportedly fell by nearly half since Celsius posted a $64 million DAI payment on July 4, mere hours after it paid $50 million in DAI.

Will the Celsius community short squeeze work?

— Cointelegraph (@Cointelegraph) June 21, 2022

Celsius is among several crypto blue-chip companies on the brink of insolvency after extreme market conditions triggered historic losses across multiple positions. The firm paused withdrawals in mid-June due to extreme market conditions and later brought on new legal counsel to advise on restructuring. Reports that United States mega-bank Goldman Sachs was looking to acquire Celsius’ assets soon surfaced.

Despite liquidity issues and signs of an imminent collapse in its business, Celsius was reportedly still paying rewards as of last week. Although Celsius users were still receiving rewards, they were unable to withdraw them due to liquidity constraints.