A foray into traditional assets like US government bonds is paying dividends for one of crypto’s biggest decentralized lenders — and for investors in its digital token.

MKR, the governance token of the $5 billion MakerDAO, has rallied 55% in July, outpacing all other major cryptocurrencies tracked by Bloomberg and hitting a 15-month high. Owners of governance tokens are allowed to vote on how decentralized protocols like MakerDAO run their businesses. MKR has more than doubled since hitting a low in mid-June.

The windfall for MKR holders traces its origin to a decision MakerDAO made in June 2022 to invest funds backing its DAI stablecoin in assets like short-term US Treasuries and corporate bonds, seeking yield at a time when turmoil was rocking crypto markets.

MakerDAO’s hoard of traditional assets now stand at around $2.5 billion, just over half of its total holdings, according to Dune Analytics’s dashboard.

With 10-year Treasury yields now hovering at around 4%, MakerDAO is benefiting from a swelling net interest margin because it pays no interest on DAI, a stablecoin pegged to the US dollar, according to Kunal Goel, a research analyst at Messari. MakerDAO has used the surplus by buying back roughly $7.5 million of MKR tokens a month, Goel estimated.

“MakerDAO pays no interest on most of the DAI supply, but its portfolio of real-world assets and productive crypto loans are generating yields of around 4%,” Goel said in a text message.

The boost to MakerDAO from expanding into traditional assets doesn’t extend to DAI. The token’s share of the stablecoin market stands at just 3.3%, according to DefiLlama, and its circulation has shrunk by almost 1 billion coins this year, to 4.14 billion.

To burnish DAI’s appeal, MakerDAO is increasing the interest rate it offers lenders on its protocol to as much as 8%. While that may hurt loan margins in the short term, it’s likely to drive adoption of DAI, according to Goel.

(Updates with plan to raise lending rate in final paragraph.)