MakerDAO hit by another scandal! Traditional financial risks spread to the DeFi world through RWA

When regulatory authorities around the world are concerned about the risk of cryptocurrency spreading to the traditional financial world, in reality, contrary to what everyone might think, real-world default events have already flowed into the decentralized stablecoin protocol MakerDAO through RWA!

MakerDAO RWA Defaults Again!

MakerDAO has always been an advocate for real-world assets. According to Maker's latest RWA report for June, Maker holds a total of 15 RWA vaults with a total loan amount of up to $2.3 billion.

In July, MakerDAO's RWA-004 vault defaulted. At that time, MakerDAO decided to stop providing additional loans to Harbor Trade, which was supported by a portfolio of supply chain financial assets, particularly loans collateralized by the company's accounts receivable. It is reported that this default event has not yet been resolved.

Default in July: Are RWAs really stable? MakerDAO faces a potential $2.1 million default, halts additional loans to Harbor Trade

Now, another vault, RWA-003, has defaulted again! ConsolFreight is a trade finance and factoring provider focused on assisting small and medium enterprises and developing countries by providing operational financial resources to stakeholders involved in international commodity and service trade.

ConsolFreight warned on Friday in a report that due to legal disputes, the largest borrowers of the $2.7 million pool, Hanhwa AUS Pty Ltd and Hanwha New Zealand Pty Ltd, are facing liquidation. The Australian Supreme Court has appointed a liquidator to wind up the company due to intellectual property disputes, freezing all payments to the debtors.

Various Types of RWAs Make Risk Management a Great Challenge

During the crypto winter that started last year, many protocol projects have been turning to real-world assets (RWAs). After all, even the so-called risk-free U.S. treasuries currently offer an annualized yield of 4% to 5%. But are RWAs really 100% stable? This probably depends on the types of RWAs and the risk management capabilities of the protocols. Even bank loans face the risk of bad debts. Projects like MakerDAO, which are making RWAs increasingly complex, are indeed bringing traditional financial risks into the DeFi world. However, real-world assets face various risks, especially the assessment of counterparty credit, which is crucial. This is why traditional finance has asset management companies specializing in this business.

For instance, payment giant PayPal sells its accounts receivable in bulk to asset management company KKR. Through this collaboration, PayPal can quickly liquidate its assets, utilize the retained free cash flow for more purposes, and transfer the risk of bad debts to KKR. Managing accounts receivable is a profound field that requires adjusting pricing models based on market conditions, a task best left to professional asset management companies.

Accounts receivable can also be outsourced: Payment giant PayPal teams up with KKR, and KKR acquires accounts receivable! PayPal boosts performance!