Polygon DAO Explores $1.3B Stablecoin Strategy Aimed at $70M Yearly Yield.

A proposal is currently being explored within the Polygon DAO community to deploy more than $1 billion in idle stablecoin reserves, which are currently stored on the Polygon PoS Chain bridge, to generate yield through decentralized finance (DeFi) platforms. This move is outlined in a pre-proposal governance post.

The Polygon PoS Chain bridge presently holds around $1.3 billion in stablecoins, making it one of the largest but underutilized stablecoin reserves in the blockchain space. According to the pre-proposal, the opportunity cost of not using these funds is an estimated $70 million annually, based on current lending rates for the three major stablecoins.

The plan suggests utilizing Morpho Labs’ vaults to manage USDC and USDT, targeting a conservative 7% annual return by employing strategies involving high-quality collateral, such as USTB, sUSDS, and stUSD.

If successful, this strategy could yield an additional $70 million per year, which would then be reinvested into the Polygon ecosystem, helping to drive further network and ecosystem growth.

If the proposal passes the initial community review, future steps would involve gradually deploying assets like DAI, USDC, and USDT into DeFi protocols, with each deployment requiring its own proposal to be approved by the community.

In the meantime, Polygon’s POL token has experienced a 5% drop in the past 24 hours, following the broader market trend in the crypto space.