MakerDAO Opens $1B Competition to Onboard Tokenized Assets From US T-Bills and Related Products

The competition, called the "Spark Tokenization Grand Prix," is focused on increasing Maker's exposure to short-duration US T-Bills and related tokenized products.

MakerDAO began accepting applications on Monday for a competition to onboard up to $1 billion in tokenized assets.

The competition, dubbed the “Spark Tokenization Grand Prix,” is designed to increase Maker’s exposure to short-duration US T-Bills and related tokenized products, according to a governance post by Steakhouse Financial, a treasury management firm that is also MakerDAO’s strategic finance core unit.

Applications will be judged on several metrics, including the tradeoff between liquidity and capital efficiency, according to the governance post. “Spark plans to utilize a more liquid product for frequent rebalancing and higher yielding product(s) for capital efficiency, with less frequent rebalancing,” Steakhouse Financial wrote last week. Spark is a subDAO of Maker that is best known for its product SparkLend, a decentralized finance lending platform.

“However, we expect the process to be dynamic and competitive,” Steakhouse Financial added. “Liquidity-focused products will need to offer an attractive net yield, and yield-focused products will need to offer suitable liquidity.”

Read More: MakerDAO Considers Offboarding WBTC as BitGo Plans Custody Changes

Liquidity is defined as the ease with which financial products can be converted to cash or fiat-backed stablecoins, while capital efficiency refers to the effectiveness of generating the most yield from a given amount of capital.

Several notable firms said they will participate in the competition, including Ondo Finance, Superstate, Mountain Protocol, OpenEden, and Securitize, the distributor of BlackRock’s USD Institutional Digital Liquidity Fund (BUIDL).

“Great to see this initiative. Ondo looks forward to participating,” Nathan Allman, the founder and CEO of real-world assets platform Ondo Finance, best known for its tokenized U.S. Treasury offerings, wrote in MakerDAO’s governance forum.

Arbitrum and Ethena’s RWA Programs

The expected submissions follow applications by Superstate, Mountain Protocol, OpenEden, and Securitize to receive an allocation from synthetic dollar protocol Ethena’s reserve fund into real-world assets. Submissions for Ethena closed on Monday, the same day MakerDAO opened its applications.

The same four companies are also participating in layer 2 blockchain Arbitrum’s STEP program, which aims to diversify the network’s treasury into stable, liquid, and yield-bearing assets.

Read More: Arbitrum DAO Approves Investing in 6 Real-World Asset Products, Including BlackRock’s BUIDL

“Our experiences with Arbitrum and Ethena have helped us shape our approach to MakerDAO’s investment proposal,” a Superstate spokesperson told Unchained in an email. “These processes, particularly Arbitrum’s, provided us with a clear blueprint for how DAOs can efficiently coordinate to achieve specific financial objectives.”

“Arbitrum’s structured and objective evaluation process allowed us to see firsthand how well-organized frameworks can help DAOs select the right partners and manage proposals more effectively,” the Superstate spokesperson said.

The deadline for submissions is September 20, 2024. After the deadline, the Grand Prix committee will review the submissions and propose selections to Maker’s governance body of MKR token holders, who will then suggest which asset managers to onboard.

MakerDAO is one of the highest-revenue protocols in all of crypto, having accrued nearly $350 million in lifetime revenue, according to data from blockchain analytics firm DefiLlama. The protocol’s governance token, MKR, has gained almost 5% in the past 24 hours to trade just under $2,000, giving the cryptocurrency a market capitalization of $1.8 billion, according to CoinGecko.

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