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Part of BlockTower’s funds were stolen. Will MakerDAO collapse?

BlockBeats2024/05/15 08:47
By:BlockBeats
Written by: Lucy, Sky, BlockBeats


On May 15, Bloomberg quoted people familiar with the matter as saying that BlockTower Capital's main hedge fund had been hacked and some funds had been drained. The funds are still missing and the hacker has not been arrested.


It is reported that BlockTower Capital has hired blockchain forensics analysts to determine the cause of the theft and recently informed its limited partners of the theft. However, BlockTower declined to comment on the hack, and its chief information officer and founder Ari Paul has not yet commented on the matter.


What is the relationship between BlockTower and MakerDAO?


BlockTower Capital was founded in 2017 and has invested in companies including non-fungible token developer Dapper Labs, game studio Sky Mavis and Terraform Labs, creator of the failed TerraUSD stablecoin. According to data provider PitchBook, the company manages $1.7 billion in assets.


BlockTower Capital focuses on investing in RWA credit assets. In January this year, two senior executives of BlockTower Capital and Goldman Sachs established a new crypto asset investment company, Neoclassic Capital, focusing on derivatives, tokenization of real-world assets, entertainment, games and social networking.


Among the RWA projects initiated by BlockTower Capital, the most notable one is BlockTower Andremeda, whose executive TACO Foundation is controlled by MakerDAO governance.


Related reading: " Inventory of MakerDAO RWA popular projects, analyzing the transaction structure of DeFi capturing off-chain assets "


The TACO Foundation was established in 2022. At the end of the same year, MakerDAO's governance actions to bundle eight proposals were voted through by the community, one of which included the launch of BlockTower's real-world asset Vault. According to Articles of Association 4.16, the Foundation Director needs to make any resolution or exercise any rights based on MakerDAO's governance vote (MakerDAO Resolutions).


BlockTower Capital, as the investment advisor of BlockTower Andremeda, signed an investment advisory contract with the TACO Foundation, responsible for managing the funds of various accounts of the TACO Foundation and making investment decisions. MakerDAO uses the TACO Foundation as a legal person to perform related matters of off-chain investment, and separates investment decisions from asset custody in traditional finance to achieve risk control compliance.


BlockTower's RWA architecture, source from Web3 Xiaolu


In addition to BlockTower Andremeda, the TACO Foundation also operates the BlockTower S3/S4 credit asset RWA project with an asset management limit of US$150 million.


One of MakerDAO's largest RWA projects


The RWA narrative has always been MakerDAO's narrative, and U.S. debt seems to have become one of MakerDAO's main goals.


On September 8, 2023, the MakerDAO community suggested considering allocating $100 million to develop tokenized U.S. Treasury (T-Bill) products, including T-Bills such as Flux fDAI as collateral; frictionless products such as Maple Cash USDC; long-term products such as supporting finance bIB01 and bIBTA.



Since 2022, MakerDAO has been continuously increasing its RWA assets. In October of the same year, MakerDAO purchased $500 million in bonds. On June 21, 2023, MakerDAO once again purchased more than $700 million in U.S. Treasury bonds. According to DL News report , MakerDAO had expanded its real asset portfolio to approximately $3.9 billion at the end of last year, mainly U.S. Treasury bonds.


Therefore, BlockTower Andremeda, under the execution of the TACO Foundation, will also focus on U.S. debt investment and continue to increase its RWA assets through BlockTower Andromeda. According to Makerburn data , BlockTower Andremeda is currently one of the largest RWA projects in MakerDAO.



Will it explode?


Today, MakerDAO has raised billions of dollars in RWA assets through various projects, of which BlockTower accounts for nearly 1/10. If MakerDAO does not misappropriate user assets for other things (such as pledge arbitrage) like FTX, 1/10 of the funds will not have a fundamental impact on mkrdao's solvency.


For mkrdao, this matter needs to deal with how to make up for this 1/10 of user assets. If mkrdao's profit is greater than this 1/10 and is willing to make up, this matter may become a good thing for mkrdao. This is a negative for the price of mkr, of course, it does not rule out that mkrdao itself released negative news for shipment.


According to TradingView data, as of the time of writing, the price of MKR has been short-term pulled up, with a price increase of $600 from 8.51 in the morning to 3.41 in the afternoon.



At present, neither BlockTower nor MakerDao has commented on the theft, and BlockBeats will continue to track the progress of the incident.


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Disclaimer: The content of this article solely reflects the author's opinion and does not represent the platform in any capacity. This article is not intended to serve as a reference for making investment decisions.

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