Polygon Community to Consider $1.3 Billion Allocation on Ethereum Bridge

The Polygon community will evaluate a proposal to leverage over $1.3 billion in reserves held in DAI, USDC, and USDT for profit generation. These funds are currently locked on the PoS Chain and Ethereum bridge.

The initiative has been put forward by Web3 risk providers Allez Labs and the teams from Morpho and Yearn. The authors of the proposal argue that the idle reserves represent an opportunity cost of $70 million annually.

The proposal aims to use the funds to stimulate additional activity on Polygon PoS and within the AggLayer.

The plan involves gradually placing the tokens in ERC-4626 vaults designated for each type of stablecoin. Specifically, DAI would be directed to sUSDS from Maker, while USDC and USDT would be allocated to Morpho.

Allez Labs will be responsible for risk management.

The proposal will be discussed on Polygon community forums and within the specialized Protocol Governance Council.

In September, the project’s developers launched an update converting the blockchain’s utility token MATIC to POL at a 1:1 ratio.

In February, the Polygon Foundation received the final 273 million MATIC tokens unlocked from the vesting contract.