Société Générale could start backing the DAI stablecoin using security tokens running on top of the Ethereum (ETH) network. This could be very positive for the Decentralized Finance (DeFi) ecosystem that has relied on DAI in order to offer solutions to investors and users in different jurisdictions. The official submission of this proposal was made by the investment branch of the Bank through MakerDAO’s forum.
French Bank Could Start Working with DAI Stablecoin
The recognized French financial company Société Générale could start using blockchain technology in order to create euro-denominated bonds. The goal is to create bonds (AAA-rated) and launch them on the MakerDAO ecosystem.
This is one of the most interesting proposals for the DeFi ecosystem as it could start being used by a large European financial company. At the moment, Société Générale is among the largest banking institutions in the continent and one of the largest banks in France.
One of the things we should take into consideration is that this decision from Société Générale is expected to have a positive impact on the whole MakerDAO ecosystem and the DAI stablecoin. Nowadays, DAI is backed mostly by USDC and Ether (ETH). The goal is to diversify the collateral and add other types of assets that would back the entire DAI ecosystem.
Along with the application, the OFH Tokens would be used as covered bonds under French Law and they would be backed by loans. The information provided by the financial institution shows that there would be a fixed interest rate for this token of 0% with issue date 14.05.2020 and maturity date 14.05.2025.
It is worth taking into consideration that the company is using the Ethereum blockchain relying on French Law to execute this financial settlement. According to the company, they want to provide issuers and investors end-to-end services to issue, manage and trade digital financial instruments (security tokens).
Furthermore, with this initiative and pilot use case, the company wants to refinance the OFH Tokens that are currently held by Société Générale and create a legal structure of the refinancing. Moreover, they would also integrate with one of the largest DeFi protocols currently in the market.
The DeFi market continues to show it is attracting the attention not only of small companies and retail investors but also large financial institutions that have a clear impact on the financial markets in Europe and other regions. We might see other similar initiatives in the future.