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Polygon DAO Community Cohort Considers Proposal to Unlock Idle Stablecoin Reserves
A Polygon DAO community cohort is considering a proposal to utilize its more than $1 billion of idle stablecoin reserves, currently held on the Polygon PoS Chain bridge, to capture yields, according to a pre-proposal governance post.
Idle Stablecoin Reserves
The PoS Bridge currently holds around $1.3 billion of stablecoins, which makes it one of the largest, but also idle, holders of stablecoins on-chain, according to the pre-proposal.
At the current benchmark lending rate for the 3 major stables, this is an opportunity cost of around $70M annually.
Proposal Overview
The authors believe that DeFi (Decentralized Finance) has matured, and assets held in the Polygon PoS bridge can be used productively and securely to incentivize additional activity on Polygon PoS, according to the pre-proposal.
Plan
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.
Benefits
This 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.
Proposal Process
If the idea passes an initial community check, the proposal will aim to generate yield by gradually deploying dai (DAI), USD Coin (USDC), and tether (USDT) 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.
Current Market Trend
Polygon’s POL is down 5% in the past 24 hours, alongside a broader crypto market slide.
FAQs
- What is the purpose of the proposal? The proposal aims to utilize the Polygon PoS Bridge’s idle stablecoin reserves to capture yields and generate additional revenue for the Polygon ecosystem.
- How much are the idle stablecoin reserves worth? The PoS Bridge currently holds around $1.3 billion of stablecoins, making it one of the largest, but also idle, holders of stablecoins on-chain.
- What is the expected return on investment? The proposal targets a conservative 7% annual return through strategies that include high-quality collaterals.
- How will the yield be generated? The yield will be generated by gradually deploying dai (DAI), USD Coin (USDC), and tether (USDT) from reserves into decentralized finance (DeFi) protocols.
- What is the current market trend for Polygon’s POL? Polygon’s POL is down 5% in the past 24 hours, alongside a broader crypto market slide.
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