CoinDesk: SocGen applies for $20mn MakerDAO loan using bond token collateral

In a proposal on Thursday on MakerDAO’s governance forums, Société Générale submitted an application for the decentralized finance (DeFi) lending platform to accept on-chain bond tokens issued by the bank as collateral for a stablecoin DAI loan. The application was submitted by Société Générale – Forge, a subsidiary of the bank with a focus on digital assets.

The loan, mediated between a number of legal entities and third parties in a somewhat complex legal architecture, would be for up to $20 million in DAI – likely the largest step towards institutional adoption of DeFi to date. The proposal is now in a discussion phase, and will move to a formal vote in the coming weeks.

The tokens that SocGen has submitted for application as collateral were issued in 2020, have a fixed rate of 0%, and mature in 2025. They sport a AAA rating from rating agencies Moody’s and Fitch. Both the bond tokens and DAI are recognized under French law.

SocGen wrote in the proposal that the loan would be a “pilot use case,” and that one of the goals of the project is to “help to shape and promote an experiment under the French legal framework.”

Sébastien Derivaux, the head of MakerDAO’s Real World Finance unit, wrote in a reply to the proposal: “This collateral should be seen as step one of what is next to come. Integrating all publicly traded bonds (that will be on Ethereum as we all know) and providing repo. Quite a huge market.”

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