MakerDAO, one of the most successful DeFi (decentralized finance) protocols, has just announced that it is lending 100 million DAI to US-based commercial bank, Huntingdon Valley Bank.
This multi-million dollar partnership marks the first integration between a DeFi protocol and a traditional bank.
The Huntingdon Valley Bank plans to use the US$100 million loan to support the growth of existing businesses and investments.
In return, MakerDAO will be able to diversify its holding and generate yield through the collateral (risk-weighted assets loans) given by the bank.
The loan collateral will be held by a trust created for MakerDAO. The trust will receive up to 50% of the interest paid on the RWA loans.
“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”Hugh (TJ) Ragsdale, Real World Asset Manager at MakerDAO
[Editor’s Note: This article does not represent financial advice. Please do your own research before investing.]
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