Polygon DAO is exploring a proposal to deploy its $1.3 billion worth of idle stablecoin reserves, currently held on the Polygon PoS Chain bridge, into yield-generating opportunities. According to a pre-proposal governance post, the DAO aims to leverage these dormant assets to generate an annual return of around $70 million, based on current lending rates for popular stablecoins such as USDC and USDT.
The proposal highlights that the stablecoins in the Polygon PoS Bridge are currently underutilized, creating a missed opportunity cost of roughly $70 million per year. The authors of the proposal argue that with the maturation of the decentralized finance (DeFi) sector, these funds can be used productively and securely to foster more activity within the Polygon ecosystem.
The plan outlines the use of Morpho Labs’ vaults to manage the assets, aiming for a conservative annual return of 7%. The stablecoins, such as USDC and USDT, will be deployed into high-quality collateral-based strategies, which include assets like USTB, sUSDS, and stUSD.
This strategy could allow Polygon to generate significant yield, which would be reinvested into the network, boosting growth and innovation within the ecosystem. If the proposal passes the initial community review, the next steps will involve creating separate proposals for deploying each stablecoin—DAI, USDC, and USDT—into DeFi protocols.
As the broader cryptocurrency market faces a decline, with Polygon’s POL token down 5% over the past 24 hours, this proposal offers a potential way to capitalize on idle assets and strengthen the platform’s financial stability.
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