Polygon DAO Considers Leveraging $1.3B Stablecoin Reserves to Generate $70M in Annual Returns

A Polygon DAO community group is weighing a proposal to turn more than $1 billion worth of stablecoins—currently sitting idle on the Polygon PoS Chain bridge—into a productive source of steady yield. A preliminary governance post suggests that by carefully deploying these reserves across decentralized finance (DeFi) protocols, the DAO could unlock roughly $70 million in annual returns.

“The PoS Bridge currently holds around $1.3B of stablecoins, which makes it one of the largest, but also idle, holders of stablecoins on-chain,” the pre-proposal states. “At the current benchmark lending rate for the three major stablecoins, this is an opportunity cost of around $70M annually.” The authors note that the broader DeFi landscape has matured, offering avenues for these assets to be used both securely and effectively, potentially stimulating more activity on Polygon’s network.

As a decentralized autonomous organization (DAO), Polygon’s governance follows a community-driven model. Decisions are carried out by smart contracts, with token holders having a direct say in matters rather than relying on any single authority. The plan involves tapping Morpho Labs’ vaults to manage stablecoins like USDC and USDT, aiming for a conservative 7% annual return through strategies involving high-quality collateral assets such as USTB, sUSDS, and stUSD.

If given an initial green light, the proposal would move forward in stages, starting with gradual deployments of DAI, USDC, and USDT into DeFi protocols. Each individual asset deployment would require its own proposal and community approval down the line. Proponents believe the resulting yields would be reinvested in the Polygon ecosystem, fueling further growth and development.

In market-related news, Polygon’s native token, POL, fell about ~5% over the past 24 hours amid a broader crypto market downturn.