BlockTower Credit, an asset management firm, recently partnered with MakerDAO and Centrifuge to bring $220 million in real-world assets (RWA) into the DeFi ecosystem.
This collaboration will enable BlockTower to issue DAI loans secured by these RWAs, bringing transparency and new revenue streams to all parties involved.
1/ @BlockTower Credit looks to capitalize on an untapped asset class as the first institutional credit-fund to tackle DeFi through collateralized real-world assets (RWAs).
Execution begins in its partnership w/ @MakerDAO and @centrifuge, bringing $220M of RWAs on DeFi rails.🧵 pic.twitter.com/IEMsnfV0yP
— Messari (@MessariCrypto) January 11, 2023
Welcome to the “Real World”
Bringing these assets to DeFi involves MakerDAO issuing four separate vaults to fund RWA investments. Each of these four vaults will have varying debt limits: 20 million, 30 million, 30 million, and 70 million DAI, respectively. The choice of four vaults, each with a different debt ceiling and collateral, allows for diversifying risk and optimizing returns.
The assets proposed would be shorter-duration, easy-to-liquidate assets. Vault 1 will be focused on whole loans or receivables, which will be arranged by BlockTower and originated by leading consumer lenders. Vault 2 will focus on senior secured credit facilities, with an emphasis on FinTech and non-bank-originated traditional asset-backed strategies.
Vaults 3 and 4 will be investment-grade structured credit, primarily consumer and auto-loan-based assets, with different maturities.
For each party involved, this partnership promises potential benefits and revenue. For MakerDAO, this partnership will enable it to access a more varied range of assets, making its stablecoin, DAI more robust and helping the DAO in generating additional revenue streams.
Moreover, the focus on RWAs could be because these real-world assets bring a lot of revenue to MakerDAO. Despite accounting for only 12% of the overall assets, RWA handled 57% of the revenue generated by MakerDAO according to Messari.
Meet your “MKR”
Despite MakerDAO’s constant efforts to increase revenue and diversify its assets, large addresses remained disinterested in the MKR token. One reason for the same could be the growing MVRV ratio and the negative long/short ratio.
The high MVRV ratio gives short-term holders an incentive to sell their positions at a profit, which could affect the price of the MKR token in the short term.
Meanwhile, at press time, the price of MakerDAO was $634.39, growing by 1.84% in the last 24 hours.