Applications Open for MakerDAO’s $1 Billion Tokenization Competition

The majority of firms participating in Arbitrum’s real-world asset treasury diversification program are also looking to join MakerDAO’s $1 billion tokenization competition.

On Monday, applications opened for Maker’s competition to onboard a maximum of $1 billion of tokenized assets.

The competition, called the “Spark Tokenization Grand Prix,” is focused on increasing Maker’s exposure to short-duration US T-Bills and related tokenized products, according to a governance post created by Steakhouse Financial, a treasury management firm, which is also MakerDAO’s strategic finance core unit.

Per a governance post, applications will be judged on several metrics, such as the balance between liquidity and capital efficiency. “Spark plans to utilize a more liquid product for frequent rebalancing and higher yielding product(s) for capital efficiency, with less frequent rebalancing,” wrote Steakhouse Financial last week. Spark is a subDAO of Maker known for its product SparkLend, a decentralized finance lending platform. 

“However, we expect the process to be dynamic and competitive,” added Steakhouse Financial. “Liquidity-focused products will need to offer an attractive net yield, and yield-focused products will need to offer suitable liquidity.”

Read More: MakerDAO Considers Offboarding WBTC as BitGo Plans Custody Changes

Liquidity is defined as the ease with which financial products can be converted to cash or fiat-backed stablecoins, while capital efficiency refers to the effectiveness of generating the most yield from a given amount of capital.  

A number of notable firms have said they’ll participate in the competition, such as Ondo Finance, Superstate, Mountain Protocol, OpenEden, and Securitize, which is the distributor of BlackRock’s USD Institutional Digital Liquidity Fund (BUIDL). 

Nathan Allman, the founder and CEO of real-world assets platform Ondo Finance, known for its tokenized U.S. Treasury offerings, wrote in MakerDAO’s governance forum: “Great to see this initiative. Ondo looks forward to participating.”

Arbitrum and Ethena’s RWA Programs

The anticipated submissions would come on the heels of Superstate, Mountain Protocol, OpenEden, and Securitize applying to receive an allocation from the reserve fund of synthetic dollar protocol Ethena into real-world assets. Ethena closed its submissions on Monday, the same day MakerDAO opened up its applications. 

The same four companies are also part of layer 2 blockchain Arbitrum’s STEP program, which is aimed at diversifying the network’s treasury into stable, liquid, and yield-bearing assets.

Read More: Arbitrum DAO Approves Investing in 6 Real-World Asset Products, Including BlackRock’s BUIDL

“Our experiences with Arbitrum and Ethena have helped us shape our approach to MakerDAO’s investment proposal,” a spokesperson for Superstate told Unchained via email. “These processes, specifically with Arbitrum, provided us with a clear blueprint for how DAOs can efficiently coordinate to achieve specific financial objectives.” 

“Arbitrum’s structured and objective evaluation process allowed us to see firsthand how well-organized frameworks can help DAOs select the right partners and manage proposals more effectively,” the Superstate spokesperson noted. 

The deadline for submission is September 20, 2024. Once the deadline passes, the Grand Prix committee will review the offerings and propose the selections to Maker’s governance body composed of MKR token holders, who will then suggest which asset managers will be onboarded. 

MakerDAO is one of the highest-revenue protocols in the entire crypto space, accruing nearly $350 million in lifetime revenue, data from blockchain analytics firm DefiLlama shows. The protocol’s governance token MKR has gained almost 5% in the past 24 hours to trade just under $2,000, giving the cryptocurrency a market cap of $1.8 billion, per CoinGecko.