Treasurys tokenized on Ethereum bring the real world to crypto
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Sébastien Derivaux, co-founder and chef at Steakhouse Financial. Photo illustration: Aïda Amer/Axios. Photo: Brady Dale/Axios
Tapping into yields from U.S. Treasurys will be key to keeping crypto's biggest decentralized autonomous organizations (DAOs) operational until the industry gets busy again.
Why it matters: In theory, decentralized finance projects can build through the downturn and come out better when the market comes back, but only if they steward resources well.
Driving the news: Sébastien Derivaux is a co-founder of Steakhouse Financial, a firm created to help DAOs do just that.
- What he's saying: "DAO treasuries are key to unlock some new DeFi primitives. This year I think tokenized T-bills are the clear primitive to unlock," Derivaux told Axios in an interview during the Real-World Asset Summit in Brooklyn last week.
Background: Derivaux previously worked via contract on a core unit of MakerDAO, the granddaddy of DeFi projects, known for stewarding the fairly decentralized stablecoin dai (DAI).
- MakerDAO has a gigantic treasury, in the billions of dollars. It's almost entirely the funds users have posted as collateral in order to borrow DAI.
Today, Derivaux says MakerDAO has moved $2.2 billion of its $5 billion under management into U.S. Treasurys (it started moving in this direction this summer).
Between the lines: Derivaux's expertise in particular is enabling blockchains to interact with analog world financial products. He helped set MakerDAO up in its prior experiments with entities like Societe General and Huntingdon Valley Bank.
- Interacting with so-called "real world assets" was always in the vision for MakerDAO, though it took years of tinkering with legal structures before a DAO without a legal identity could do it.
- Then it needed to wait for the macro shift where there are once again real yield opportunities out there (particularly, Treasurys).
State of play: Today, Steakhouse is working with some of the biggest DAOs, such as Lido (which makes derivatives out of assets staked to blockchain validators), Venus Financial (a money market in the Binance ecosystem), the Ethereum Name Service (basically a decentralized domain registrar), and MakerDAO.
Be smart: There are different kinds of treasuries. Some, like MakerDAO's, are assets a DAO ultimately stewards for its users.
- Others, such as Uniswap, have a treasury largely made up of its own token. These DAOs set aside some of the token to fund operations as it was created.
- Other decentralized applications generate revenue, and some of them drive some of that revenue into its treasury. That's the case of Nouns, an NFT DAO which just broke up. Its treasury came from selling a new NFT every day.
The bottom line: Some blockchain purists are uncomfortable about leaning on traditional finance as it seeks yield, but Derivaux sees this as myopic.
- "If you want to change the world, you need to change the real world," he said.
- "You can change your video game, which is the blockchain, but if you want to impact the life of everyone, you need to change the financial world."
