The Polygon DAO community cohort is considering a proposal to utilize its over $1 billion of idle stablecoin reserves held on the Polygon PoS Chain bridge to generate yields. The current idle stablecoin reserves on the PoS Bridge amount to around $1.3 billion, making it one of the largest holders of stablecoins on-chain. The opportunity cost of keeping these assets idle is estimated to be around $70 million annually at the current benchmark lending rate for the three major stablecoins. The authors of the proposal believe that the DeFi space has matured to a point where assets held in the Polygon PoS bridge can be used productively and securely to incentivize additional activity on the network.
DAOs, or decentralized autonomous organizations, are organizations represented by rules encoded as computer programs and controlled by the token holders associated with that organization. They operate independently of any central authority. The plan proposed by the Polygon DAO community cohort involves using Morpho Labs’ vaults to manage USDC and USDT, targeting a conservative 7% annual return through strategies involving high-quality collateral such as USTB, sUSDS, and stUSD. By implementing this plan, Polygon could potentially generate an additional $70 million in yearly revenue from its idle assets. The generated yield would then be reinvested back into the Polygon ecosystem to support growth across the network and its ecosystem.
If the proposal gains initial approval from the community, the next step would be to gradually deploy the idle assets of dai (DAI), USD Coin (USDC), and tether (USDT) from reserves into decentralized finance (DeFi) protocols. Each asset deployment would require a separate proposal to be put forth and passed by the community in the future. Despite the positive potential of the proposal, Polygon’s native token POL has seen a 5% decline in the past 24 hours, in line with the broader downturn in the cryptocurrency market.
In conclusion, the Polygon DAO community cohort is exploring a proposal to utilize its idle stablecoin reserves on the Polygon PoS Bridge to capture yields. The current idle reserves amount to over $1 billion, presenting a significant opportunity cost if left unused. By leveraging Morpho Labs’ vaults and targeting a conservative 7% annual return through high-quality collateral, Polygon could potentially generate an additional $70 million annually from its idle assets. The generated yield would be reinvested back into the Polygon ecosystem to support growth and development across the network. While the proposal is still in the early stages, it showcases the potential for DAOs to leverage their assets effectively in the DeFi space.
