Key Information:
- A community group within Polygon DAO is considering a proposal to utilize over $1 billion in idle stablecoin reserves.
- The strategy implements Morpho Labs' vaults for managing USDC and USDT with an aim for a 7% annual return.
- This initiative could generate an additional $70 million annually from these inactive assets.
A proposal is under consideration by a Polygon DAO cohort to leverage its idle stablecoin reserves exceeding $1 billion, stored on the Polygon PoS Chain bridge for yield generation. According to the pre-proposal document:
“The PoS Bridge currently holds around $1.3B of stablecoins, which makes it one of the largest, but also idle, holders of stablecoins onchain. At the current benchmark lending rate for the 3 major stables this is an opportunity cost of around $70M annually.”
This initiative is part of a broader belief that DeFi has advanced to a point where assets on the Polygon PoS bridge can be productively employed without compromising security, encouraging increased activity within the Polygon ecosystem.
The proposal entails using Morpho Labs' vaults for managing USDC and USDT, targeting a prudent 7% annual return through strategies that incorporate high-quality collateral such as USTB, sUSDS, and stUSD.
If this concept passes the preliminary community review, future proposals will focus on generating yield by gradually deploying DAI, USDC, and USDT from the reserves into decentralized finance (DeFi) protocols. Each asset's deployment will necessitate distinct proposals to be ratified by the community.
Polygon’s POL has recently declined by 5% within the last 24 hours, aligning with a broader downturn in the cryptocurrency market.
