Institutional and Long Term Vaults Proposal

There is no opportunity to sign the deal on behalf of Maker for now, therefore it could be unilaterally signed from Nexo Management.

Automated collateral management should be able to initiate a simple sequence of automated actions:

  1. IF collateral ratio is below 150% → Initiate sequence
  2. Withdraw ETH from Binance/hot wallet to Defi wallet
  3. Deposit ETH as additional collateral

This automated sequence of actions should cover 99.999% of collateral rebalance cases, with manual backstops in case of catastrophic failures & other black swan events. One such backstop could be an automated collateral deposit address created by the Maker team, which does not rely on Defi accessibility and can be send in an emergency from any address without having to be the vault owner.

Hope this helps address your questions, Diego.

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Why Binance? if FTX is superior in many aspects?

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Read as “Withdraw from CEX”, we are on all major exchanges and keep balances there.

To expand on previous post, I would also like to indicate the interest of Nexo to commit to a further increase of $100 - $200m of our current oustanding debt ($400M).

The proposed parameters were developed in direct dialogue with our team to optimize both sides’ objectives. The only parameter we believe to not be final is a potential structure to decrease origination fee with the increase of the vault size.

In other words, final figure for a vault increase would be between 100 and 200M DAI, depending on the timeline of the implementation. Also given a clear structure to reduce origination fee with the vault size, we would potentially be able to commit to a 200M DAI increase right away and within a short timeframe of launching the Institutional vault.

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Hi Kiril, thank you for your response and Nexo’s commitment to increasing DAI usage.

Firstly, I am very keen to see the assessment from @aes as mentioned by @primoz above. I expect this will provide the community with scenario analysis data to confirm the competitive parameters of this proposal.

In the interim however, and in response to the above discussion; PE, Risk and Growth would like to put forward our recommendation that the origination fee remain at the stated 1%. We consider this to be a competitive arrangement and would only recommend the community consider reducing this fee if the amount of DAI generated begins to approach or exceed 1B.

Similarly, we would like to see 200M as the initial/additional commitment on top of Nexo’s existing exposure. We see this as mutually beneficial when combined with the gradual reduction of the stability fee - something no other vaults are getting. Any amount less than 200M reduces the benefit to Maker relative to existing vault parameters.

As always, MKR voters will be the ultimate deciders and we welcome alternative views and perspectives on the above.

With regards to the timeline - the code is written and we can have this product available almost immediately pending Governance and Community approval. The above proposal has also sparked discussion with other DeFi ecosystem entities who are in discussions with the Growth Team, so it is positive news that although we are finding our feet while negotiating on behalf of a DAO (something that has rarely/if ever been done before in this context), it is getting the attention of others in this industry and is being seen as a favourable solution, which is great!

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Thank you very much for your answers, they clarified my doubts, with nothing more to say, I hope for the best news for this proposal.