100-Year-Old Pennsylvania-Based Bank Approved to Leverage Makerdao’s Stablecoin Vault

Makerdao, the Decentralized Autonomous Organization (DAO) that issues the DAI stablecoin, has approved a governance proposal that calls for “the integration of collateral from a US-based bank.” Makerdao’s governance proposal was passed by a majority vote of more than 87% and gives US financial institution Huntingdon Valley Bank the means to leverage a stable vault.

Huntingdon Valley Bank to Use Makerdao’s Stablecoin Vault System with Off-Chain Lending – RWA-009 Initial Debt Cap is $100M

According to a Makerdao governance poll, the community has approved a collateral integration proposal with Pennsylvania-based financial institution Huntingdon Valley Bank. Makerdao discussed the proposal on July 4, 2022 and noted that the RWA-009 concept would be the first of its kind in the world of decentralized finance (defi). The term “RWA” used in Makerdao’s proposal stands for “real world assets”.

Century-old Pennsylvania-based bank has been approved to leverage Makerdao's Stablecoin Vault
Huntingdon Valley Bank (HVB) is a Pennsylvania chartered financial institution that was founded in 1871. HVB is a subsidiary of the bank’s parent company HV Bancorp, Inc. (Nasdaq Capital Market: HVBC).

“A US-based bank’s first collateral integration into the defi ecosystem draws near,” the project’s official Twitter account Explain. “Maker governance votes to add RWA-009, a DAI100 million debt cap participation facility offered by Huntingdon Valley Bank, as a new collateral type in the Maker protocol,” the team added. .

In a Twitter feed published in late March 2022, Makerdao detailed how the program works as it would allow Huntingdon Valley Bank (HVB) to borrow DAI using HVB’s equity loans as collateral. “The application also requested an initial debt cap of $100 million in Huntingdon Valley Bank equity loans diversified across all loan categories offered, to be deployed over a period of 12 to 24 months from inception,” Makerdao said at the time.

Century-old Pennsylvania-based bank has been approved to leverage Makerdao's Stablecoin Vault
Two graphs shared by the Makerdao team on March 25, 2022, which explain how the partnership with Huntingdon Valley Bank works.

Makerdao also revealed that while HVB would be the first to complete the project’s “master purchase agreement”, the project has full “intentions to incorporate more banks in the future”. The project’s DAI stablecoin is the fourth-largest stablecoin project by market valuation at $6.48 billion.

Over the past seven days, Makerdao’s native crypto asset, MKR, has risen 2.5% against the US dollar, but year-to-date, MKR is down more than 65%. At the time of writing, at $921 per unit, the DAO native MKR crypto is still up 448% from the all-time low of $168 per unit recorded on March 16, 2020.

In terms of defi dominance, Makerdao controls a touch of over 10% of the $75.54 billion locked value of the entire defi ecosystem. Makerdao’s total value locked (TVL) is $7.56 billion today, down 4.38% from last month.

The recently adopted governance proposal with HVB follows Makerdao’s plans to introduce Starknet’s Layer Two (L2) scaling support in late April. The Makerdao team said that Starknet zero-knowledge (ZK) accumulation solution could make DAI transfers much cheaper than on-chain fees.

Makerdao community members have been wanting to leverage real-world assets in the project for quite some time. Hexonaut, a protocol engineer at Makerdao, explained in mid-March 2022, that the DAO needs to “take the next step and start integrating with the real world at scale.” The deal with Huntingdon Valley Bank uses off-chain loans that represent real-world assets (RWAs) pledged by the Montgomery County-based Pennsylvania bank.

Keywords in this story

100 million, DAI, Dai Stablecoin, DAI transfers, DAO, debt ceiling, decentralized autonomous organization, decentralized finance, DeFi, governance proposal, Hexonaut, Huntingdon Valley Bank, HVB, loans, makerdao, Makerdao DAI, Makerdao governance, MKR , Off-Chain Loans, Bank of Pennsylvania, Real World Assets, RWA, Stablecoin, Stablecoin Vault, Starknet, Total Value Locked

What are your thoughts on Pennsylvania Bank using Makerdao to access DAI? Do you see the integration of crypto with more real-world assets in the future? Let us know your thoughts on this in the comments section below.

Jamie Redman

Jamie Redman is the news manager for Bitcoin.com News and a fintech journalist living in Florida. Redman has been an active member of the cryptocurrency community since 2011. He is passionate about Bitcoin, open-source code, and decentralized applications. Since September 2015, Redman has written over 5,700 articles for Bitcoin.com News about disruptive protocols emerging today.

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