MakerDAO, Through its partnership with Huntingdon Valley Bank (HVB), a Philadelphia community bank stablecoin DAI It officially brought together traditional finance in the USA.
First Loan Partnership Established Between a DeFi Institution and a US Bank
The protocol today announced its official offer of 100 million DAI to HVB, creating the first commercial loan partnership between a US-controlled financial institution and a decentralized digital currency.
To support the growth of existing businesses and investments, HVB formally filed a MakerDAO onboarding application in March to request DAI.
In return, MakerDAO will be able to diversify its counterparty exposures and generate returns on DAI assets through HVB’s bond managers.
Today is a defining moment to envision the potential of connecting decentralized finance and real-world finance.
Huntingdon Valley Bank and Maker pioneer the first commercial loan participation between a US Regulated Financial Institution and a decentralized digital currency. pic.twitter.com/wajJYVJwwz
— Maker (@MakerDAO) August 23, 2022
The initial loan is worth $100 million, with the first transfer making up half of the total loan. HVB will have the opportunity to request more capital over the next 12 months.
MakerDAO put HVB to the vote as the new stablecoin vault type in July, and this management vote passed with 87% approval.
TJ Ragsdale, who manages MakerDAO’s real-world assets, said in July:
“As demand for crypto leverage declines, real-world rates soar, so there is an opportunity for Maker to print DAI at a low cost of capital and lend it at a higher rate against really good, solid real-world assets.”
However, the US administration cryptocurrency Sanctioning mixing service Tornado Cash had made MakerDAO management members worried that the DAI stablecoin was too dependent on central stablecoin distributors, and Circle in particular.
The USDC token makes up a significant portion of the platform’s DAI stablecoin reserves.
*Not investment advice.
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