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Polygon DAO Weighs $1.3B Stablecoin Deployment to Generate $70M Annual Yield

The plan uses Morpho Labs' vaults to manage USDC and USDT, targeting a conservative 7% annual return using various strategies.

Mise à jour 13 déc. 2024, 9:26 a.m. Publié 13 déc. 2024, 9:11 a.m. Traduit par IA
(Shutterstock)
(Shutterstock)

What to know:

  • A Polygon DAO community cohort is considering a proposal to activate more than $1 billion in idle stablecoin reserves.
  • The plan involves using Morpho Labs' vaults to manage USDC and USDT targeting a conservative 7% annual return.
  • That could make Polygon an additional $70 million yearly from idle assets.

A Polygon DAO community cohort is considering a proposal to use its more than $1 billion of idle stablecoin reserves, currently held on the Polygon PoS Chain bridge to capture yields, per a pre-proposal governance post.

“The PoS Bridge currently holds around $1.3B of stablecoins, which makes it one of the largest, but also idle, holders of stablecoins onchain,” the pre-proposal reads. “At the current benchmark lending rate for the 3 major stables this is an opportunity cost of around $70M annually.”

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“The authors believe that DeFi as a whole has matured whereby assets held in the Polygon PoS bridge can be used productively and securely to incentivize additional activity on Polygon PoS,” it added.

DAOs are organizations represented by rules encoded as computer programs, controlled by the token holders related to that organization and not influenced by a central authority.

The plan involves using Morpho Labs' vaults to manage USDC and USDT targeting a conservative 7% annual return through strategies that include high-quality collaterals like USTB, sUSDS, and stUSD.

That could make Polygon an additional $70 million yearly from idle assets. The yield generated would be reinvested back into the Polygon ecosystem, supporting growth across the network and its ecosystem.

If the idea passes an initial community check, the proposal will aim to generate yield by gradually deploying , USD Coin (USDC) and tether from reserves into decentralized finance (DeFi) protocols.

Deploying each asset will require a separate proposal to be floated and passed by the community in the future.

Polygon’s POL is down 5% in the past 24 hours alongside a broader crypto market slide.

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