Unfortunately, the math will not work with the cost structure at such a low rate. At the least it’s estimated the trust will charge around 10 bps for anything under $15 million in size, and 7.5 bps from $15 to $25 million. Interest rates can and do change, so perhaps there will be less demand or more supply at the front end of the Treasury curve in the future.
I would like to see us attempt slightly higher yielding (but still very safe) dollar-denominated debt like agency debt and certain corporates. I propose Treasuries as a beginning point for a few reasons. The first, is of course, that it exposes us to not much more risk than we have just by being pegged to the dollar. The second is that it is simple – it is an instrument we do not even need a broker for. The third is that it is such a deep market, we can use it to scale should we want to increase supply to help manage the peg. The fourth is the PR aspect – “Maker: lender to governments” and the novelty of using the government’s own debt to fund whatever causes will earn us the most goodwill.
As to supply, note that fixed income in general will not only provide us with regularly scheduled income far into the future, but also future demand for DAI (the trust would need to take USD it receives in interest and buy DAI to repay debt to its vault). How helpful would it be to know that the week of June XX, 20XX, there will be XX million DAI that will be purchased on the open market? It won’t replace the PSM for fine tuning, but may help us hold less than multiple billions inside it.
This is intended to be the first phase of a more comprehensive area of growth for Maker. Larger scale, different investments, and more flexible structure can and will be iterated on – at the very least, the legal world is rapidly evolving in response to blockchain and DAOs. I recognize this CU’s program would be a significant shift in the DAO’s real world involvement, beginning to spread funds around for political self-defense and actually doing business with governments and traditional markets head-on instead of remaining in a self-imposed isolation.
I want to take this program in small steps in recognition that it may take the DAO some time to digest that Maker has become financial evolution’s favored child. That the very idea is controversial with regard to using the US government’s funds own debt funding to send cash to underserved causes tells me not to push further until skeptics can see firsthand that profits, generosity, and integration into the heart of the financial system will provide benefits to everyone involved.
I deeply appreciate your support, and most (perhaps all) of your suggestions are already a priority for the middle- and long-term for this CU. If there’s a way to move forward when they get implemented, I’ll do it.