MakerDAO, the organization responsible for the stablecoin DAI, has taken a historic move. The company carried out the first loan of a digital asset protocol to a traditional bank.
The loan was made to Huntingdon Valley Bank, a financial institution with more than a century of existence. MakerDAO approved the loan application made by the financial institution founded in 1871.
MakerDAO gives first crypto loan to a bank
As MakerDAO is a decentralized organization, the bank submitted the proposal for a vote on the protocol, which received 117,540 votes in favor and 4,200 against.
According to MakerDAO, the deal allowed the bank to withdraw up to 100 million DAI. As informed by the bank, the resource will finance new and existing operations as of September. In addition, the bank will repay commercial mortgage loans on real estate investments and finance construction for the sector.
Governance House, one of the network’s delegates, called the proposal a milestone in the crypto industry. After all, this is an important step in connecting MakerDAO with traditional financial institutions.
The bank confirmed the deal on Aug. 19 in an announcement. According to the bank, its objective is to allow the DAI to be backed by “income-generating commercial assets” originated by a regulated US financial institution.
“This is the kind of financial innovation that helps bring stable assets into the cryptocurrency space. In addition, it also brings real benefits to the US economy. This new source of funding will allow economic growth to continue through the expansion of commercial lending activities,” said Travis J. Thompson, President of the HVB.
Not long ago, MakerDAO came up with a plan to issue other stablecoins in addition to the DAI. Under the name of “Endgame”, the proposal is based on the creation of “metaDAOs” and synthetic versions of Ether (ETH).