Societe Generale proposes historic $20M DAI mortgage in exchange for bond tokens
One of France’s main banks has turned to decentralized finance pioneer MakerDAO to suggest the submission of bond tokens as collateral for a mortgage of the DAI stablecoin.
The historic proposal referred to as “Security Tokens Refinancing” was submitted to Maker’s governance boards by the worldwide financial institution on Oct. 1. It can be the primary main collaboration between a conventional financial institution and a DeFi protocol and will open the door for nearer integration between the 2 sectors.
Societe Generale (SG) labeled it because the “first experiment at the crossroads between regulated and open source initiatives.”
The financial institution has proposed that it gives “OFH” safety tokens (obligations de financement de l’habitat) that are characterised as lined bonds underneath French regulation, and backed by house loans.
These can be used to collateralize a $20 million mortgage in Maker’s DAI stablecoin which might be mediated by a variety of authorized entities and mature in six to 9 months.
The Ethereum-based safety tokens had been issued in May 2020 with a nominal quantity of 40 million Euro ($46.3M) and a set charge of 0%. They mature in May 2025 and have the highest credit standing of AAA by ranking companies Moody’s and Fitch.
MakerDAO founder Rune Christensen mentioned he had “no clue” about this proposal, including that “this is one of multiple recent examples in Maker Governance of how the post-foundation model of organization is proving to be more scalable.”
Société Générale, the third largest financial institution in France, simply made a collateral onboarding software to Maker for 20 million USD.
Backed by EUR bonds, proposed by their blockchain subsidiary.https://t.co/hxGEMOIWjy
— Rune Christensen (@RuneKek) September 30, 2021
Industry observer “DCInvestor” commented on the potential affect of offers similar to this on Ethereum and its place as a world settlement layer:
“Societe Generale with their attempt to get their on-chain assets usable in Maker and you’re wondering if Ethereum will become a global settlement layer it’s happening, now.”
SG acknowledged that the mortgage can be a “pilot use case,” with the purpose of serving to to “shape and promote an experiment under the French legal framework,” and “enhance a profitable service and foster liquidity for digital bonds.”
SG Forge, a regulated subsidiary of the financial institution that offers with crypto belongings, is managing the proposal which is predicated on the open-source framework CAST (Compliant Architecture for Security Tokens).
The authorized framework for the deal is complicated because it must combine an institutional monetary group with a decentralized governance-based community. A flowchart offered by the financial institution particulars six separate entities concerned within the course of. These embody the registrar Societe Generale Forge, the financial institution itself SG, MakerDAO, a authorized consultant for the DeFi protocol, safety agent DIIS Group, and a third-party exchange agent.
Related: Senator Warren’s workplace confuses MakerDAO for failed 2016 challenge The DAO
Pseudonymous MakerDAO group member ‘PaperImperium’ commented on the proposal within the discussion board:
“Maker and SocGen-Forge are standing at the precipice of financial history. What a time to be alive.”
The proposal is at present being mentioned and can transfer to a proper governance vote within the weeks to return.
It is just not the primary time Societe Generale has dabbled with Ethereum-based safety tokens. In April 2019, the financial institution’s SG Forge unit issued a 100 million Euro bond as an OFH safety token on Ethereum.