[NS-DROP] MIP6 Application: New Silver DROP: Real Estate-Backed Loans

This is a MIP6 Proposal for the addition of New Silver’s tokenized real estate backed loans to MCD by New Silver. New Silver originates and administers the asset collateralization using Centrifuge. This is the continuation of a joint pilot together with the Maker Foundation in summer 2019 where we tokenized a first mortgage as a pilot transaction.

Much of how Centrifuge works has been covered in the previous MIP6 proposals [CF-DROP,PC-DROP]. In the following we have added a few links that go into more detail on the technical topics.

1. Who is the interested party for this collateral application?

The asset originator, New Silver, is represented by Kirill Bensonoff (@prankstr25, [email protected], Managing Partner at New Silver) and Alex Shvayetsky ([email protected] Managing Partner at New Silver).

Centrifuge is providing the technology and framework for bringing real-world assets to MCD. The main contact on Tinlake for the application is Lucas Vogelsang (@spin, [email protected]) of Centrifuge as well as Lea Schmitt ( username:_LS, [email protected]).

2. Provide a brief high-level overview of the project, with a focus on the applying collateral token

We will start with a brief summary of New Silver, the Asset Originator, and provide information on the Tinlake Protocol, the technology that Centrifuge has built and how they interact with Maker later.

The asset type we are proposing for inclusion in MCD is slightly different to the majority of collateral applications: the Asset Originators will be using MCD directly as a line of credit to originate new loans against asset-backed real estate. This means they will add large amounts of debt likely using up the assigned debt ceiling for the collateral type while paying a stability fee in return that is in par with industry standard rates. In fact, New Silver is proposing a slightly more conservative rate to ease real-estate backed loans into the system: the yield on the collateral is projected to be around 6% (our current warehouse line is 5.25%). New Silver is convinced that these rates can be securely lowered over time and DeFi will evolve into a cost effective competitor to the traditional financial system.

About New Silver

Founded in 2018, New Silver is a technology enabled non-bank lender primarily focused on providing real estate-backed financing for the United States ‘fix and flip” market with a concentration on single-family residential assets. New Silver’s proprietary technology automates loan originations and speeds up underwriting, while using data science to reduce loan default risk. Furthermore, New Silver’s FlipScout tool uses intelligence in order to help find projects with the highest ROI.

These assets have the following characteristics:

  • Collateral: US-based residential real estate
  • Average Loan Size: $ 176,898
  • Maturity: 12-24 months
  • Historic Loan Default Rate: 0%
  • Advance Rate: Up to 85%
  • Interest rate charged to Borrowers: As of today, from 10.875%-13% per year
  • Types of Advances: Fix and Flip, Refinance

The following describes an exemplary use case of a rehab loan (also referred to as a fix and flip loan). Rehab loans allow real estate investors to finance both the purchase and the construction, or in some cases, refinance an existing investment property with sufficient equity.

Overview of Tinlake Smart Contracts

Centrifuge is building a full stack of tools to bring real-world assets into DeFi:

  • Centrifuge provides the technology stack to tokenize real-world assets in the form of an NFT. Each NFT represents one unique real-world asset, a loan, with a unique default risk that is priced by an off-chain oracle.
  • Tinlake is the securitization protocol that handles the bundling of these individual loans and issues an interest bearing ERC20 token against the pool to allow investors with different risk profiles to invest into the pool. For the New Silver asset pool these tokens will be called [NS-TIN] and [NS-DROP]
  • [NS-TIN] represents the junior tranche and takes first loss. For New Silver the ratio is set at 20% to establish confidence in this asset class. For comparison, New Silver’s current warehouse line with a bank merely requires 10% equity. Please find the documentation on our tranche structure here and the forum thread about how they work within MCD.
  • We propose [NS-DROP] with a 6% stability fee for the MCD inclusion

Legal Setup

Along with the necessary technical infrastructure to bring these assets into DeFi, the Asset Originator sets up a legal structure that provides the necessary support to ensure that anyone that owns a DROP token has a legal claim to the underlying assets. This is done with a legal structure very commonly used in the traditional financial system: The collateral for the individual loans are assigned to a legal entity, the “special purpose vehicle” and investors get an ownership interest in the entire portfolio of this entity (with this entity the assets are in an a bankruptcy remote structure that is not influenced by the Asset Originators).

3. Provide a brief history of the project

About New Silver

Kirill and Alex, the New Silver co-founders, have known each other for many years. Over the last 20+ years, Alex has worked his way up to a CFO at a large commercial real estate operation in Connecticut. Kirill has started and exited a number of technology companies (such as Unigma by Kaseya and StratusPointIT ). Both co-founders were introduced to the “fix and flip” market by a mutual friend who ran a fund that invested in these projects, where Kirill and Alex joined as Limited Partners. After exploring the technology landscape of the vertical, the partners decided they can add value on three fronts - making the loan origination process faster and easier by providing instant, online loan decisioning; using data to reduce default risk; and building value-add tools to help investors be more profitable.

To date, the company originated over $30mm loans and had no defaults. Prior to Covid19, the company was originating $3-5mm per month, and took a pause during the pandemic to assess market risk. Today, the management team is confident in the single family residential (SFR) market - consumer mortgage rates at all time lows, mortgage applications are near their all time highs and increasing while home mortgages in forbearance are decreasing and foreclosures for the year are lower than in the past years. While the commercial real estate market may be temporarily affected by the pandemic, the management team feels strongly that the SFR market is substantially different and will continue to have a scarcity of supply thus driving demand and price appreciation. New Silver anticipates to originate around $50M in the next 12 months.

New Silver strongly believes in DeFi and its revolutionary effect on financial systems. DeFi will eventually touch every corner of the economy, and real estate backed loans will not be the exception. Single family residential assets are a strong asset class that has been performing well over the past decade, and will add value and diversification to the MCD collateral portfolio. For New Silver, MakerDAO will provide a bank-alternative financing option that we hope will expand sustainably over time.

About Centrifuge

Centrifuge has been working on enabling businesses to borrow money using their assets in DeFi since the project was founded in 2017. It was founded by a team of experienced entrepreneurs who at their previous company, Taulia, built supply chain finance products for over 120 of the Global 2000 companies focusing on financing assets in the global supply chain. Centrifuge has received $8.2M in VC funding from a list of experienced & reputable investors and its core mission is to change the rules of global commerce by bringing fairer financing options to business around the world. With Tinlake we are building the tools to make these assets liquid and truly DeFi native.

Centrifuge shares Rune’s vision that real-world assets in MCD will be the essential driver to scale adoption to the masses while diversifying risk. We are closely working with the community on how real-world assets should be integrated into MCD and how we aim at minimizing trust as we bring these assets live.

Centrifuge and the Maker Foundation have collaborated on helping numerous asset originators prepare for bringing real-world assets into DeFi. Centrifuge is currently actively supporting the onboarding process of the two asset classes that have received the most votes of the Community Greenlight of the first MCD governance cycle (see CF-DROP,PC-DROP) and preparing more asset types to come - such as real estate-backed loans.

4. Link the whitepaper, documentation portals, and source code for the system(s) that interact with the proposed collateral, and all relevant Ethereum addresses. If the system is complex, schematic(s) are especially appreciated.

Technical documentation about Tinlake can be found here:

5. Link any available audits of the project. Both procedural and smart contract focused audits.

Centrifuge has conducted several audits of its technology stack. The audits can be found here: https://github.com/centrifuge/security/tree/master/audits

6. Link to any active communities relating to your project.

  • Centrifuge Discourse Forum
  • Participating in Maker Community Calls [1], [2]
  • We are hosting occasional Collateral Onboarding Calls with the Maker community; the recording of previous calls can be found here: [1], [2], [3], [4]

7. How is the applying collateral type currently used?

Centrifuge Tinlake has been in development since early 2018 and is evolving rapidly. We currently have three active pools with three different Asset Originators and a total transaction volume of more than 1.6 million DAI. Find both active and closed pools on https://tinlake.centrifuge.io/.

New Silver DROP tokens in DeFi:

  • Summer 2019: First test transaction. In summer 2019 New Silver funded a real-estate backed loan of 70,000 SAI to real estate developers. This was one of the first transactions we did testing Tinlake (v1). The Tinlake smart contracts have evolved and have been audited since then. Funds for this txs were provided by the Maker Foundation.

  • July 22nd, 2020: Tokenized Current Fund. A couple of weeks ago we tokenized a portfolio of seven 12-24 month real estate bridge loans that are extended to real estate developers. The total volume makes up 1,021,597 DAI. Find more details here.

  • Inclusion in MCD: In the coming weeks the 1.02M DAI fund already in existence will be opened up to external investors. Upon onboarding to MCD New Silver intends to include Maker as one of their senior investors using the NS-DROP as collateral to open a Vault on MCD.

8. Does one organization bear legal responsibility for the collateral? What jurisdiction does that organization reside in?

New Silver has incorporated New Silver Pilot LLC, a Delaware (USA) limited liability company (the special purpose vehicle, “SPV”). This SPV has been formed to finance New Silver’s assets.

This SPV structure creates a bankruptcy-remote entity whereby owners, debt holders or interested parties of this newly created SPV are left unaffected by the parent’s financial, operational and/or legal health.

9. Where does exchange for the asset occur?

The SPV enters into a subscription agreement with investors who are receiving DROP from the SPV in turn for providing DAI. The DROP token can be redeemed against the cash flows of the underlying collateral directly from the SPV by any DROP holder. This is ensured by the Tinlake smart contracts and the primary way for interacting with these tokens.

10. (Determined by Legal Domain Team) Has your project obtained any legal opinions or memoranda regarding the regulatory standing of the token or an explanation of the same from the perspective of any jurisdiction? If so, those materials should be provided for community review.

We do not have any materials we can provide at this time.

11. (Determined by Legal Domain Team) Describe whether there are any regulatory registrations for the token and provide related documentation (including an explanation of any past or existing interactions with any regulatory authorities, regardless of jurisdiction), if applicable.

12. (Optional) List any possible oracle data sources for the proposed Collateral type.

Determining the correct price of a real-world asset behaves differently from pricing Ethereum native collateral tokens. In order to adequately price a real estate-backed loan several factors must be considered (please read our fundamentals of pricing real-world assets for additional information). Tinlake requires not just an accurate price of the overall pool but details on a loan by loan basis. As these form the basis as well for the DROP token, we will start outlining the pricing for those first:

In approving clients and determining a risk score, New Silver utilizes a strict process and prudent thresholds with respect to:

  • FICO score of the borrower

  • Borrower experience

  • Borrower liquidity

  • Appraised property value

  • Automated Property Valuation

  • Average days on market in Zip Code

  • Standard deviation from median sales price in zip code

  • FHFA HPI Maximum Yearly Decrease 2006-2018 in County and State vs National

  • ZHVI (Zillow Home Value Index)

  • Median sale price for zip code to ARV %

  • Monthly sales count by zip code

  • Census data - average household income, town population

The risk score calculated from these inputs is used to determine approval, advance and interest rates. The Tinlake contracts then use these per NFT values to control how much money borrowers can withdraw.

To determine the value of the entire portfolio (simplified the sum of the market value of all loan NFTs) is usually by doing a net-asset-value (NAV) calculation across the portfolio. Centrifuge is implementing the NAV model in smart contracts that can calculate this information based on individual pricing information in real time based on the NFT price information.

13. (Optional) List any parties interested in taking part in liquidations for the proposed Collateral type.

The way this collateral type is used varies from how standard vaults are opened: DROP tokens have a stable USD price and any small fluctuations in the loan portfolio performance should be covered by the insurance provided by the TIN tranche. This means that under normal operation, the Asset Originator would not see their Vault get liquidated. A liquidation would only occur if a large amount of defaults occur across the portfolio that the risk model did not calculate.

In case the Vault gets liquidated, the Tinlake contracts enforce a rebalancing of the pool to bring it back to its required collateralization ratio and will not allow issuing any new loans. Instead the Tinlake contracts are from this point on taking all of the cash flows generated by the borrowers and disbursing these to DROP token holders. New Silver provides financing for real-estate bridge loans with an average 12-24 months terms. So far New Silver did not have distressed loans in their portfolio. If required, however, the following companies have a longstanding history of buying distressed loans to name but a few: Fortress, Apollo, Ares

Collateral Status Index
Initial Thoughts and Questions for Including Real World Assets in the Maker Protocol
[📄] Collateral Onboarding Call #8: Centrifuge + 6s Capital - Wednesday, September 16 17:00 UTC
RWA - Last 2 months review, updates and looking forward
[NS-DROP] Collateral Onboarding Risk Evaluation
Maker Relay Ep. 52 - en español
[NS2DRP] NS-DROP/MIP22 Token Smart Contract Domain Team Assessment
[P1-DROP] MIP6 Application: Peoples Company DROP: US Agricultural Real Estate
[FFT1-DROP] MIP6 Application: Fortunafi DROP: Revenue Based Financing Assets
Maker Relay Ep 29
[📄] Collateral Onboarding Call #5: New Silver + 6s Capital - Wednesday, August 12 17:00 UTC
[OST] MIP6: Collateral Onboarding Application by UPRETS Real-Estate Backed Digital Security
[📄] Collateral Onboarding Call #8: Centrifuge + 6s Capital - Wednesday, September 16 17:00 UTC
[KF-DROP] MIP6 Application: Kickfurther DROP: Consignment Inventory Finance For eCommerce & Retail Brands
MIP13c3-SP5: Declaration of Intent: Maker to commence onboarding work of Centrifuge based Collateral
Maker Relay Ep 09
[📄] Collateral Onboarding Call #5: New Silver + 6s Capital - Wednesday, August 12 17:00 UTC
Maker Relay Ep 8
Weekly Polls - 2020/08/17
Week 9 DAI Distributions - SourceCred trial
RWA - Reseña de los últimos dos meses, actualizaciones y lo que viene
Maker Relay Ep. 29 - en español
[SolarX] MIP6 Application: Uprets/SolarX: Industrial Real Estate-Backed Loans
New Silver Onboarding Executive Presentation
Real-World Finance Core Unit Report - 2021-03
Maker Relay Ep 53
Maker Relay Ep. 53 - en español
Maker Relay Ep 52

Can you explain a few things:

  • How would liquidations work? What happens if someone can’t actually take ownership of the loan contract if they’re in a legal jurisdiction that prevents them from doing so? I imagine anyone can take ownership of the NFT, but they would obviously have to sell the contract because they can’t physically redeem the cash flows earned from the drop. Is this right?

  • How do price feeds work in valuing the asset? You mention a few datapoints there but it seems like this requires a very interesting liquidation criteria since the assets aren’t exactly liquid.

  • Can MakerDAO see these tranches? After 2008 I think this could very easily slip into something extremely odd with tranche debt packages that seriously have no way to accurately value the underlying loans?

  • What happens in worst case scenarios? These averages are great by extreme value theory says averages really don’t matter. If this business goes under, how can MakerDAO recollateralize?


Yes, you are right, as a keeper bidding on these assets if you don’t have the ability to get a legal recourse over these assets would not be a good idea. This does exclude some keepers but there are definitely keepers that are willing to do so. Keepers today are also KYCing with centralized exchanges to get liquidity today.

Yes, Tinlake’s tranches are transparent and visible to anyone on chain. Their existing portfolio of DAI 1.02M in loans is here: https://tinlake.centrifuge.io/0xeb33ab19d17d62950b16e843005fcdda62d5f551/assets

The information presented here is very minimal but more details can (and will be) made available both by the asset originator and by third party oracles.

One key difference between 2008 and what we are doing with Tinlake is the transparency. In 2008 mortgage backed securities were often layered many times and completely intransparent. The ratings agencies that gave these assets a classification had every incentive to give them a rating without anything at stake if they mispriced them. The difference here is that New Silver will take part of the junior tranche, having the most direct exposure to the portfolio taking any first losses.


I have a number of friends in the SFR market. A few are smaller players but we have connections to some very large players that are in both the SFR market and Commercial markets (apartments as well as businesses). General discussion both with these players and various realitors they have been dealing with are as follows:

  1. WHile forbearance has decreased, expect it to increase substantially over the next year to two as covid plays out and the free money to folks unemployed runs out. There is a substantial legal lag for a good number of reasons that has not come forward yet and is expected to build dramatically. This has not shown up in actual numbers but is starting to show up in some of these players cash flow bottom lines whether eviction processes are stalled and tenants simply are not paying.

  2. Interest rates are expected to pretty much stay at all time lows and this probably will keep prices stable or edge higher I don’t think I saw a loan to property value rate profile? You are advancing up to 85% but what is the size of these loans relative to the property backing value.

  3. Is the pool going to be a single pool of all the assets or just pieces? What I am concerned about is location risk here. Are the properties expected to have broad geographic components in this(these) pool(s) or are they going to have geographic risk?

  4. How does the various intermediaries make money, and what does their risk profiles look like here. I have been looking at a few of these tokenized realestate vehicles and I have not seen risk/backing profiles that are well balanced with firms doing them against the investors taking on the risk. How much stake does New Silver have in any of this that they stand to lose as a % against what they are expecting investors to pick up?

  5. Is there any component of your business that is highly dependent on bank rates?

  6. What is the total number of loans made so far?

  7. How many have fully matured?

  8. How many are still maturing?

  9. What is your effective capital usage % against current fees as a % of total loans

  10. Exactly how does New Silver manage borrowers so that bad borrowers never get back into the system?

  11. How are valuations set and then checked on the properties so that loans are sufficiently over collateralized.

  12. Would New Silver engage or not in running a keeper on these assets? Why or Why not?

  13. What is the typical minimum value of these assets. We have seen some indications in liquidations if the vault value is too high that the bids for liquidations are poor at best?

  14. What about liquidation fees of 13%? Typically this means a LR of at least 120% to be able to have any hope of any collateral coming back to a vault. Even at a LR of 150% often times in distressed markets vaults will not return collateral. Is there a suggested LR that works for these assets or are there any concerns if the LR or LF is too high this doesn’t work?

In general I like this application for real estate a bit more than doing something on invoices.

I think the whole issue here is going to center on NFT valuations, pricing oracles, and in the end keepers with sufficient capital to actually take on the liquidation risk/cost/legal hassles. I am also a bit weary about how young this company is and what these markets are going to be doing over the next 12-24 months generally. I also am hoping there isn’t geographic risk in these pools but will wait for an answer on these questions. Given the size of the players in this arena my friends and I have had the pleasure to sit with it will be interesting to take what you guys are doing and see how they react.

So here is a general question. Is there any kind of good explanation document I could print and hand off to a guy who has like $10M and as much as 1B in real estate assets to give them a good heads up as to what you guys are doing. If so please post a link, please and thank you.


I like the idea of “bring your own keeper” for these companies bringing real world assets on Maker. I don’t think the DeFi community is set up to handle these, plus with the tranches, liquidations should be rare

1 Like


“the bring your own keeper” is for some cases essential, as some assets are considered debt instruments and so (in the US) are covered by US laws on securites which limits buyers to being accredited investors or licensed financial companies.

Yes @monteluna , I also see the liquidation issue as the largest remaining issue for the various DROP tokens.

@spin - maybe you can answer this:
How does Maker ensure that Vaults opened with NS-DROP is actually being spent on refurbishing real estate? Is there some way to double check this through Centrifuge?

1 Like

Apologies for the small tangent…

@LongForWisdom @charlesstlouis Updating the MIP6 application template to include a keeper infrastructure question would require an amendment, yes?

Might be easier to just ask a follow up question after they submit…

1 Like

@Jtathmann, yes it would. But the greater issue is that MIP6 will need a whole new chapter for real world assets.

@Jtathmann In order to add or remove a question from the current MIP6 application template, one would use the MIP6c3: Application Template Amendment Process to create and propose a MIP6c3-SP subproposal with this template. Note that the RFC stage for this change is at least one month (feedback period / frozen period). In general, asking additional questions to the MIP6 proposer is encouraged, so you can always do that but if you want all future MIP6 applications to answer it, proposing it to be formally added to the MIP6 Application list is the best way to go about it.

@Planet_X In my personal opinion, I believe that real-world assets (RWAs) fall under the Collateral Onboarding problem space. Thus, any proposal related to RWA Collateral Onboarding would be added to the current Collateral Onboarding MIPs Set going forward and follow the same onboarding framework.


Hi All,

Thanks for submitting this collateral onboarding application. Before I get into my questions, I’ll take the time to point others to my prior write-ups on questions about Centrifuge and their Tinlake model. You can read those chains regarding Consulfreight and Paperchain. @Planet_X also touched on a core issue for Centrifuge above, namely liquidations (I would add Emergency Shutdown, too, as an open question because it seems that it was never experimented with during the Pilots that Centrifuge writes about frequently).

Regardless, I want to focus on New Silver and including these real estate-linked assets in the Maker Protocol. It’s an exciting opportunity, for sure, if done correctly and in compliance with the applicable regulations.

FWIW, I am not a real estate investment expert, so please excuse my ignorance if I am asking a “stupid” question or two. That said, could the New Silver team respond to a few items that popped up while I did due diligence on this application and its backers:

  • As stated on its website, New Silver is a “hard money” direct lender. My assumption was that most hard money lenders operating in the US were required to hold state lending licenses. (Here’s this article for high-level background).

  • I went through the applicable real estate licensing websites for some of the states mentioned on NS’s home page (Montana, Iowa and Florida), and I couldn’t find information for “New Silver.” Can you please let us know if New Silver carries any licenses in the thirty-nine (39) states where it operates? Admittedly, I probably don’t know the name of the correct entity, but if you can give some color to clear this up that would be great.

  • If New Silver doesn’t carry licensure in any of those states, can you please explain why? I understand that there might be a reason why the lending you do does not require a license. Still, in my opinion, the DAO should be aware of that while it reviews the collateral.

  • Also, if New Silver or an affiliated entity has lending licenses, can you please provide the license and registration numbers state-by-state? I’m sure some DAO members and MKR holders, aside from me, would also like to verify.

  • Lastly, I did some searching on Google and came across information on a recent venture by New Silver’s founders (led by Kirill Bensonoff), Caviar. It appears that the Massachusetts Securities Division brought an enforcement action against Caviar (here’s the administrative complaint) and its founders in January 2018 for an ICO/unregistered securities offering. Here’s another story and another I found regarding the matter for any DAO members who are interested.

  • Can New Silver (or Mr. Bensonoff) provide some insights on what came of the Massachusetts Securities Division lawsuit and whether (and how) it was resolved? Also, can you please confirm if the lawsuit is still ongoing?

  • I believe it’s important to look into Caviar for several reasons. First, the Caviar enforcement action runs quite close to the founding of New Silver (the state filed its complaint in January 2018, and New Silver was founded “in 2018”). Second, it seems that there is overlap in the corporate ownership of both Caviar and New Silver (Mr. Bensonoff was the CEO of Caviar and is the managing partner of New Silver).

  • What’s more, I am worried that negative consequences from the litigation for Caviar may color the operations of New Silver. And an enforcement against Caviar could complicate the ability of New Silver’s leadership team to provide collateral for the Maker Protocol.

Evaluating projects and their prospective collateral requires us to look at tokens, their development and economic modeling and the backgrounds of the project teams. On that note, though I think New Silver’s application is interesting, the DAO should address these questions as part of the green lighting process.


Thank you everyone for your questions, this is Kirill, the Managing Partner of New Silver. I will try to answer your questions here.

In terms of licensing, the resource you pointed to is not correct (it also appears they are in the business of helping companies secure licensing). We provide business purpose (non-consumer) loans secured by real estate, and licensing is not required in 40 of the 50 states. We do not operate in states where licensing is required, and the states listed on the Locations page are states where we operate. This information was confirmed to us by our law firm Geraci, which focuses on law for our industry. Happy to expand with more specifics on this if necessary.

On your questions around Caviar, this was a company I was involved in in 2017-18. Caviar and New Silver are totally different entities and have no business overlap. Caviar performed a compliant fund-raise outside of the United States, reliant upon Reg S exemption from registration. However, the Massachusetts Securities Division, headed by Secretary of State Bill Galvin (who was up for re-election in 2018 and facing a tough opponent), used the ongoing hype around cryptocurrencies as a PR platform to get media exposure to help his campaign. He announced that he did not like Bitcoin because it “did not pass his smell test” and waged an aggressive campaign against blockchain startups. Unfortunately, we were one of those startups and were caught in the cross-hairs. The only allegation the state made was that we had conducted our “offering” improperly and targeted MA residents by advertising to them on social media. Their only evidence to this was that their investigator saw one of our ads, and this happened because they were “re-targeted” by Google (the investigator first went to our website and then saw our ad by being re-targeted). Our marketing company, while excluding US and some other countries from our ads, did not turn off re-targeting US users. After the re-election of Galvin and the Bitcoin crash of 2018, the state lost interest and went dark on us. We did no want to litigate and waste time and money, and decided to settle in February of 2019, paid a fine and agreed to refund any investor from the state of MA (of which there were not any). As a result, we also decided to close Caviar and provided refunds to all investors. This was from a time long ago and has no bearing on our activities today and in the future.

I hope I have provided some color on this and happy to answer questions as they come up.


Thanks for your question, I put together a reply to each of the parts below.

  1. This is a very good question and is certainly at the forefront of our thinking, which I can share here. We believe that in the medium to long term, the fundamentals of the SFR asset class are strong – US is still a top economy, creating innovation and attracting skilled workers, who at some point start a family and want the American dream of homeownership (or an SFR rental in the suburbs). In the shorter term, things are a bit more uncertain. We have not seen any pressure to the downside yet, actually, we have seen price appreciation due to low inventory. We are guided by data, and one of the better recent data analysis was done by Zillow in this publication. Zillow economists predict a 2-3% price decline. We have analyzed other data and we are guided by a potential price decline of 0-5%. Most of our loans are 12 months, and the exit strategy for borrowers is a consumer sale, and this should be robust while mortgage rates are so low (we put our long term product Rent on hold for now). So given the short term loan duration, when we are underwriting loans, we look at areas where the highest price drops occurred in the last recession, and often times will reduce the loan leverage or the collateral value by up to 5% to compensate for the potential price decrease.

  2. If I understand your question correctly, you are asking about loan to value? We go up to 85% Loan To Value, and we only advance the money for purchase upfront. The borrower then needs to begin construction using their own funds, and after construction is partially complete, we send an inspector who reviews and puts a value on the amount of work completed, and we reimburse the owner for that partial work according to the terms of their loan.

  3. It will be a pool of loans from different geographies

  4. There will be 2 tranches, senior (represented by the DROP token) and junior (represented by the TIN token). We propose MakerDAO to participate in the senior tranche (NS-DROP), and New Silver and other investors will have direct stake in the pool by participating in the junior tranche, which takes first loss.

  5. No, though we may use a bank credit facility in conjunction with other credit. Bank facility costs are very low right now, and we don’t anticipate them increasing by much any time soon.

  6. We originated 123 loans

  7. 39 have been paid off

  8. 84 are still outstanding

  9. I would like to provide clarity on this but don’t understand what you are asking. Can you give more context?

  10. Our system tracks all applications, if a person applies again, we will know they were denied previously and review why. There might be times when they were denied because of poor credit, and it has improved, so we may consider them again.

  11. The collateral is valued with at least 2 independent data points – the first being an AVM (Automated Valuation Model) which we source from a partner (Clear Capital), the second being an on-site appraisal performed by an independent appraiser. If there is a large price discrepancy, we use other sources to either review the appraisal (desktop review) or use a third valuation source to confirm value.

  12. We are open to discussing a “bring your own keeper” scenario, but we are also connected with multiple third parties who buy distressed loans, so we can facilitate a process with them.

  13. The average loan amount has been $177,000

  14. We anticipate that the liquidation fee can be lower than 13% as the assets are much more stable compared to current crypt-collateral - but of course the risk team and the MakerDAO governance should be involved in this process to determine the precise parameters.


I was the former head of residential loan pricing at HSBC, and home equity loan pricing at Wells Fargo. As a consultant with a Big 4 accounting firm, I assisted top 10 banks in the late 00s value/bid on major, headline worthy acquisitions. Besides pricing individual resi loans, I structured and traded whole loan pools, and structured and traded MBS. Some of the remarks about the motivations of the rating agencies and rationale for the 2008 collapse belie the fact that risk was mis-priced. Whose fault that was is for history to decide. Full disclosure, I love what the Centrifuge team is putting together and kudos to Maker Foundation for encouraging this great fintech laboratory.

In theory, there’s no reason why the proposed structure cannot work. On the pricing side, the unsophisticated DeFI community would likely mis-price risk, unless they treated all of these as unsecured investments. At that point, New Silver should always get better priced financing from a traditional lender who understands the nuances of real estate loans. Alternatively, if the DeFI community under-priced the risk to see some action, then there is reputation risk when all the losses get driven right to their wallets.

Perhaps allowing only qualified lenders to trade these tokens or ask Centrifuge to setup an unsecured tranche for folks to fund would be a good start. On the recourse side, it would be nice to see an example where a court, anywhere, enforced recourse based on token ownership. I imagine the first time will be drawn out and expensive, but someone will have to pick that fight eventually so that precedent can be established. All in all, a great idea and something that I think is a forgone conclusion in the space.


Thank you for your feedback. On the pricing side, I believe the DeFi community has become fairly sophisticated, and in addition, the risk team would be heavily involved. Also, the plan is to have a junior tranche in a first loss position. The loan leverage is consistent with market conditions and takes into account various factors on the borrower and the collateral with the effort to reduce risk. We believe the risk to the network should be very small.

On the recourse, just to be clear, in addition to tokens, there is a legal agreement that gets signed, so any court enforcement should be fairly standard.

It would be neat to see how the community figures out how to handle recourse. For instance, would there be votes to appoint an attorney? Super interesting!

Pricing wise, with any mature asset class you have scores of folks that work at institutions whose job it is to optimize returns. That means understanding not only the collateral, the borrower, and the market, but also understand the interplay between all the parties to game the system as much as possible. If you work as an asset aggregate and you are searching for a source of funds you are going to do everything possible to borrow short safe and lend long risky. Depending on the asset class and level of risk, pricing as far off as 50 basis points would cause folks to drive a train through it.

We would love to help if you could think of where the greatest need is.


you touch upon an important issue here with regards to optimizing returns. This topic is still some time off before we in the community will have to deal with it but it is on the radar so to speak.

There is also the issue of the community work situation. Right now we have two handfuls of crypto collateral with parameters set rather roughly. For crypto that is OK and as far as I know we have received few complaints. That will however change when we start onboarding fiat collateral where every 0.25% matters. Collateral type A pays a 4.25% stability fee while Collateral type B must pay 4.5%?! Expect the team behind Collateral type B to complain often and loudly. Multiply that by half the number of onboarded teams and you get a lot of noise, not optimal for a group of people who work largely for free.

There is also a bandwidth problem with how many collateral types the community is capable of onboarding per month while maintaining a sufficient level of quality.

Pricing off by 50 basis points? That is going to happen at times, the question is what steps we can take to identify and change these situations quickly when they happen.

Hi Kirill,

I appreciate the extra color, and I would like to ask a few more questions if that’s okay.

On the licensing issues, do you all need licensed real estate agents to effectuate the lending? Does your team have individuals/teams brokering and lending in the different states where NS operates? If your organization employs or works with licensed individuals, can you please provide their names and licensing information?

On your time with Caviar, your team (which, if the internet is correct, involved you and your current partner in New Silver, Mr. Shvayetsky), settled with the MSD. Was that settlement public? I was unable to find it online. Before the DAO considers onboarding New Silver’s assets, we should also understand, in my opinion, if the Massachusetts Securities Division placed any restrictions on you or Mr. Shvayetsky with regard to raising capital from the sale of securities. Can you please confirm that the MSD imposed no such restrictions? However, if the MSD did impose restrictions, can you provide more information?

And again, I want to thank you for your time and answering everyone’s questions diligently. For sure, those efforts should not be overlooked. As a high point, it’s really great that founders and team members make the effort to get in the forums and go over these matters with the DAO. I won’t speak for anyone else, but I certainly appreciate (and even enjoy!) the back and forth of reviewing the onboarding applications.

Hi there, happy to answer these.

  1. Because we do not originate consumer loans, in the states where we operate, no real estate (or lending) licenses are required, and we do not employ any licensed real estate agents.
  2. As far as MSD goes, the settlement was not made public. Furthermore, Mr. Shvayetsky was not party to the lawsuit, I am the only person in the team that resided in the state of MA. I can also confirm that there are no restrictions placed on myself in any regard as a result of the settlement.

I hope this answers your questions.

The Idea is awesome. Thinking about it for several years. Keep following you progress and happy to contribute if any request)

Thank you very much!

Also, we have received a number of inquires about participating in the current Centrifuge pool of New Silver loans. We appreciate your interest, the pool is currently fully funded, we will inform once a new pool opens up.