French bank Societe Generale, which has more than 138,000 employees in 62 countries, prefers another DeFi platform over giants like Bitcoin (BTC) or Ethereum.
Societe Generale prefers this DeFi project over BTC
Societe Generale accessed MakerDAO vault to withdraw $7 million worth of DAI. The banking giant is attracting DAI for the first time since August 2022, when MakerDAO added the bank to its crypto-focused subsidiary. When Societe Generale was added to MakerDAO’s coffers, the line of credit in DAI was unanimously set at $30 million, backed by MKR 96,551. Meanwhile, the vault is equipped with 40 million euros in bonds in the form of tokenized securities issued in the OFH token, Ethereum.
In addition, the MakerDAO vault is backed by over-collateralized loans, according to Moody’s AAA ranking. But the whole process goes back to October 2021, when SG Forge took on the task of converting borrowed DAI to USD. The aim was to offer funds converted to Societe Generale as loans in exchange for OFH tokens.
Since there is no liquid market for tokens, if loans are undercollateralized, the liquidation process of OFH tokens will be more manual compared to MakerDAO’s other collateral vaults. While SG Forge’s initial withdrawal has been slow, MakerDAO representative and crypto researcher Mika Honkasalo says he expects the bank to withdraw the maximum of $30 million in DAI “soon.”
I’m not entirely sure why it took them so long to use the vault, but my experience with these real-world entity things is that everything always takes a long time.
MakerDAO’s goal was to raise the collateral base of the DAI stablecoin
MakerDAO wants to increase the stablecoin’s price stability by raising the collateral base that supports DAI. Societe Generale’s initiative with the DAO is therefore very fruitful for the web3 company. Meanwhile, stablecoins, while useful, come with some risks. In May, we saw Terra UST, one of the largest algorithmic stablecoins, lose price stability in the event of a market crash. Therefore, unaudited, fiat-backed stablecoins may not have the reserves claimed by their issuers.
About the Societe Generale
Societe Generale is the banking service that maintains its relations outside of Europe. The company is headquartered in Paris and is one of the oldest banks in the country. The bank has approximately 130,000 employees worldwide and operates in 62 countries.
In January 2008, the bank incurred a loss of 4.9 billion euros as a result of the transactions made by a single employee of the bank. It is counted as the highest loss in its style in history. After this announcement, credit rating agencies decided to downgrade the company’s rating. Société Générale is the third largest financial investment institution in the Eurozone.
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