MakerDAO to Vote on $100M Loan Participation with Florida Commercial Bank, Cogent Bank
MakerDAO, a crypto lending platform, is considering a new proposal to collaborate with another commercial bank to connect decentralized finance (DeFi) with traditional finance. Florida-based commercial bank, Cogent Bank, has proposed a $100 million participation in loans to MakerDAO's RWA Master Participation Trust.
Maker Governance votes on 4 Governance Polls within the current monthly governance cycle.— Maker (@MakerDAO) February 17, 2023
What's being voted on and what are the implications?
Recap, here. ↓ pic.twitter.com/YivsBJHpHv
This proposal is part of MakerDAO's monthly governance cycle and aims to replicate the same terms and conditions that Pennsylvania-based Huntingdon Valley Bank (HVB) agreed upon when it entered into a collateral integration with MakerDAO in July 2022. This allowed HVB to borrow against its assets using DeFi.
MakerDAO would use its trust arm to link Cogent Bank's capital to its Dai stablecoin under the same conditions. The trust entity would manage the partnership with the bank and ensure DAI minting and destruction from the vault.
The DeFi protocol would gain exposure to the credit market in at least eight categories, including commercial real estate, industrial, life insurance, consumer, and public finance, with loans issued mostly on a fixed-rate basis.
This collaboration would provide revenue sources for MakerDAO through fees associated with maintaining the vault, minting DAI, and yields. The benchmark 30-day average secured overnight financing rate stood at 4.15% as of Jan. 5.
Cogent Bank, formerly known as Pinnacle Bank, has $1.3 billion of assets under management and is insured by the Federal Deposit Insurance Corporation. Loans originated in the first three quarters of 2022 totaled $602 million, and in 2021, they summed up to $873 million.
In 2022, MakerDAO announced a governance process for its first collaboration with a traditional bank, Huntingdon Valley Bank, to endure the crypto winter. The DeFi protocol plans to onboard other banks depending on the results of its integration with HVB.
In conclusion, MakerDAO is voting on a new proposal with Florida's Cogent Bank, which proposes a $100 million participation in loans to MakerDAO's RWA Master Participation Trust. This collaboration aims to strengthen the connection between DeFi and traditional finance, with revenue sources for MakerDAO through fees and yields. Cogent Bank is a reliable partner with insured assets and significant loan origins, providing exposure to at least eight credit market categories.
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