Parsec Weekly #38
RWA sector outperformance
RWA sector outperformance
Amid a lack of attractive on chain yield sources, bringing off chain sources of yield on chain has become a rare source of growth, particularly tokenised US treasuries. Products like OUSG (Ondo Short-Term U.S. Government Bond Fund) and others are experiencing continued inflows:
The current lack of demand for leverage in on chain money markets and lack of good risk-adjusted stablecoin farming opportunities has made deploying stable coins into off chain assets relatively attractive. This has led to a steady conversion of stable coins into tokenised treasuries or yield-bearing treasury-backed stablecoins, a trend we expect to continue. MKR’s sDAI (read more here) has shown strong traction with over $1bn DAI of inflows following a rate increase to 5% and the launch of sDAI on Spark:
MKR continues to enjoy a strong first-mover advantage having invested over $2bn in short-term bonds through off chain structures since February 2022. With such a large RWA portfolio MKR are able to offer a 5% Savings Rate on DAI and buy back MKR with surplus profits. The success of sDAI and a constant flow of MKR buy backs (thanks to the Smart Burn Engine) has led to continued MKR outperformance relative to its defi 1.0 peers:
Frax are looking to implement something similar to sDAI and have set up an off chain entity FinResPBC to bring treasury yields on chain at the lowest possible cost. Smaller projects like Ledgity have also emerged but have broadly struggled to generate meaningful TVL. Historically betting on the leader (MKR) has yielded the best returns but we would not discount widening participation from RWA-adjacent coins. We will be watching Frax v3 closely upon launch but for now Maker is the RWA kingmaker.
good
a big project