The community governing MakerDAO, the decentralized autonomous organization (DAO) behind stablecoin DAI, has allocated $500 million for investing in U.S. Treasurys and corporate bonds.

The funds will be come from its overcollateralized stablecoin, with 80% going toward U.S. short-term Treasurys and 20% to investment-grade corporate bonds. MakerDAO's community voted in favor of the allocation proposal, which was presented in late June.

Stablecoins and their collaterals have been the subject of debate since the implosion of the $40 billion Terra ecosystem and its stablecoin UST, which had ripple effects on the broader crypto market.

The move by Maker is aimed at diversifying its balance sheet into "scalable legacy finance investments, limiting exposure to any one asset and expanding revenue streams" and will be initiated by decentralized-finance (DeFi) asset adviser Monetalis.

In a separate announcement, digital asset bank Sygnum said it is the lead partner in the $500 million diversification effort.

Maker said that it has complete a $1 million transaction with the remaining investments to follow. Signum said it is working with BlackRock Switzerland to allocate $250 million in the first phase of the plan.

DAO are entities with no central leadership and whose decisions are carried out by software rather than by human managers. DeFi is an umbrella term for lending, trading and other financial activities carried out on a blockchain without traditional middlemen.

Maker's investment plan is an example of decentralized governance participation and an effort by the industry to make tainted algorithmic stablecoins more stable. MakerDAO’s stablecoin DAI is decentralized, but also overcollateralized, backed by ether (ETH) deposited into its smart contracts.

Read More: Is MakerDAO Becoming ‘a Company Run by Politics’?

UPDATE (Oct. 6, 11:00 UTC): Adds details for Sygnum in the fifth paragraph. Updates dek.