Crypto credit platform MakerDAO has chosen a new proposal to bring more commercial banks into the ecosystem, strengthening the relationship between decentralized finance (DeFi) and traditional finance.
According to MakerDAO’s governance forum, Cogent Bank – a Florida-based commercial bank – proposed to participate in a $100 million loan to MakerDAO’s RWA Master Participation Trust.
Maker Governance voted in 4 Governance Polls in the current monthly governance cycle.
What is the choice and what are the implications?
Recap, here. ↓ pic.twitter.com/YivsBJHpHv
– Maker (@MakerDAO) February 17, 2023
The proposal is part of MakerDAO’s monthly governance cycle and seeks the same terms and conditions as the Pennsylvania-based Huntingdon Valley Bank (HVB), which entered into a collateral integration with the crypto company in July 2022, allowing the bank to lend to the company. assets using DeFi.
In the same situation, MakerDAO will use the hand of trust to link the capital available in Cogent Bank with MakerDAO’s stablecoin Dai (DAI). The trust entity will be responsible for ensuring the printing and destruction of DAI from the vault, as well as managing the partnership with the bank.
The DeFi protocol will gain exposure to the credit market of at least eight categories, including commercial real estate, industrial, life insurance, consumer and general finance, with loans typically issued at fixed rates.
Among the sources of revenue for MakerDAO are the costs associated with maintaining the vault, printing DAI, and generating it. The benchmark 30-day average overnight financing rate stood at 4.15% on January 5.
Before the acquisition in 2018, Cogent Bank was known as Pinnacle Bank. Bank of Florida has $1.3 billion in assets managed and insured by the Federal Deposit Insurance Corporation. According to the company, loans originated in the first three quarters of 2022 totaled $602 million and totaled $873 million in 2021.
In an effort to endure the future of crypto in 2022, MakerDAO announced the governance process for its first collaboration with a traditional bank, Huntingdon Valley Bank. At that time, the DeFi protocol announced plans to onboard other banks depending on the outcome of the integration with HVB.