MakerDAO voting on $100M loan participation with Florida commercial bank

Crypto lending platform MakerDAO is voting on a new proposal to bring another commercial bank into its ecosystem, strengthening the link between decentralized finance (DeFi) and traditional finance.

According to the MakerDAO Governance Forum, Cogent Bank, a commercial bank based in Florida, is offer participate in a $100 million loan to the MakerDAO RWA Master Assistance Trust.

The offer is part of MakerDAO’s monthly governance cycle and comes with the same terms and conditions as Pennsylvania-based Huntingdon Valley Bank (HVB), which entered into a collateral integration with the crypto firm in July 2022, allowing the bank to borrow against assets using DeFi.

Under the same terms, MakerDAO will use its trust arm to link the capital available in Cogent Bank to the MakerDAO Dai (DAI) stablecoin. The Trust Authority will be responsible for creating and destroying DAI from the vault, as well as managing the partnership with the bank.

Cash Flow Chart, Maker Vault/Cogent Bank. Source: MakerDAO forum.

The DeFi protocol will gain access to the lending market in at least eight categories, including commercial real estate, industrial, life insurance, consumer and government finance, with loans issued primarily on a fixed rate basis.

MakerDAO’s sources of income include storage fees, DAI issuance, and yield. Base 30-day Average Collateralized Overnight Financing Rate stood at 4.15% as of January 5th.

Prior to the acquisition in 2018, Cogent Bank was known as Pinnacle Bank. The Bank of Florida manages $1.3 billion in assets and is insured by the Federal Deposit Insurance Corporation. Loans issued in the first three quarters of 2022 were $602 million, up from $873 million in 2021, according to the company.

Seeking to survive the crypto winter of 2022, MakerDAO has revealed the governance process for its first collaboration with traditional bank Huntingdon Valley Bank. At that time, the DeFi protocol announced plans to connect other banks depending on the results of its integration with HVB.

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