Sygnum, the world’s first digital asset bank, has been chosen by Maker protocol as lead partner in USD half-billion treasury diversification into traditional assets to boost returns and further strengthen the balance sheet.
Maker is the longest-standing and leading decentralised finance (DeFi) lending protocol, with over USD 7bn in total locked assets, and creator of DAI, a decentralised collateral-backed stablecoin pegged 1-1 to the US dollar. Its mission is to empower individuals and businesses to realise the advantages of digital money, and promotes the benefits of financial freedom, control and decentralisation. Maker uses a novel decentralised governance model to ensure the stability and transparency of the DAI stablecoin, its collateral and the community.
To generate DAI stablecoins, Maker users deposit crypto as collateral with a price volatility buffer. However, as the USD 10.5bn collateral pool includes the non-yield bearing USDC stablecoin, a new strategy was required to earn positive returns and further strengthen the balance sheet. Monetalis, a green-economy finance firm, stepped in to propose to the Maker community a USD half-billion diversification into traditional assets.
In response, Sygnum combined their DeFi, regulated banking and asset management expertise with BlackRock Switzerland’s portfolio analysis capabilities to deliver a solution favoured by 72 percent of the Maker community. As lead partner in the first phase, Sygnum’s crypto-fiat gateway is converting USD 250m of collateral into USD, which will then be diversified into traditional assets via a portfolio of BlackRock’s fixed income iShares ETFs.
Rajiv Sainani, MakerDAO Europe Growth Lead, says “This portfolio diversification tangibly demonstrates the innovation and real-world benefits traditional assets are bringing to the DeFi-enabled finance revolution. This collaboration is another step towards a world where technology is creating new and better financial models.”
The deal’s end-to-end solution called for a counterparty with a banking licence who could acquire the ETFs and also provide institutional-grade custody for both crypto and traditional assets. Sygnum’s DeFi credentials, regulated banking experience and two-way crypto-traditional finance bridge were considered critical in securing the Maker community’s overwhelming support.
“Maker’s vote confirmed Sygnum as a “crypto-native” bank, working hand-in-glove with the DeFi community. It is proof that traditional-crypto finance industry investments can flow both ways, and that the future has heritage, especially when shaping next-generation finance” says Martin Burgherr, Sygnum Bank Chief Clients Officer.
In 2021, the crypto industry received USD 33bn of institutional investments, more than all previous years combined. Maker’s diversification into traditional assets represents a reversal of this one-way fund flow trend. It proves that two-way fund flows are not only possible but can be executed quickly by trusted counterparties like Sygnum with maximum transparency – a factor essential for community-governed protocols.
“We’re pleased to work with Sygnum on this innovative solution that demonstrates the versatility of fixed income ETFs. This project illustrates how BlackRock’s portfolio analytics, risk management and asset allocation capabilities can be applied, using the ready tradability of fixed income ETFs, to help investors achieve a wide variety of goals” said Ed Gordon, Head of iShares & Wealth in Switzerland and Co-Head of the EMEA Wealth Leadership Team at BlackRock.
Sygnum is the world’s first digital asset bank, and a digital asset specialist with global reach. With Sygnum Bank AG’s Swiss banking licence, as well as Sygnum Pte Ltd’s capital markets services (CMS) licence in Singapore, Sygnum empowers professional and institutional clients or qualified investors (e.g., corporates, banks, and other financial institutions) to invest in the digital asset economy with complete trust. Sygnum operates an independently controlled, scalable, and future-proof regulated banking platform. Our interdisciplinary team of banking, investment, and Distributed Ledger Technology (DLT) experts is shaping the development of a trusted digital asset ecosystem. The company is founded on Swiss and Singapore heritage and operates globally.
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