On-Chain Securitization Roadmap / New Silver audit

Their list of investors is much longer. And we are not on it.

My point is that they have backers who can help them. Don’t they have a famous law firm?

We should certainly have counsel review their fixes. But we should not be paying to rewrite the legal structure of a platform whose sole purpose is to create a sound legal structure to bridge RWA and DeFi.

But the important thing is we have a to-do list. So everything is addressable. Once the most urgent concerns have been, then we should be back on track.

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So I asked and the answer is that enforceability opinions are very helpful due diligence elements but they are not a substitute for a legal analysis of the receiving party (which is needed even just to understand the limits of the enforceability opinions, indeed, some stuff are based on “customary practice” and not even written in the enforceability opinion, and my knowledge of “customary practice” is next to null).

@christiancdpetersen also provided a helpful description “Enforceability opinion means that a court will enforce the terms of the agreement (agreement is not legal). A legal review is about leveraging the experience of external counsel on a host of commercial and legal matters, including, among others, enforceability. Is it a term market? What the risks, etc? They are completely and totally unrelated.”

So it is my understanding that it’s a way for the borrower side to reduce the time needed on legal review on the lender side. At scale, it’s probably a market practice to make the borrower pay for the lender’s legal review cost anyway. Like making it a borrower MIP6 cost. Great way to shrink the deal flow to nothing as well… :thinking:

As a notable aside – how much did Centrifuge’s integrations with Maker (and Centrifuge’s related marketing) drive investment from those notable individuals? Suppose one looks at the summer/fall 2019 Centrifuge “pilot” with the Maker Foundation, and the venture round they raised in October 2019. In that case, it appears that Centrifuge brought on investment principally because of the promise of their conenction to Maker. Given that shark and remora-like relationship, it seems troubling that we are stuck footing the bill to fix a legal structure that Centrifuge should have worked out and paid for in the first place.

Perhaps rather than freeze Centrifuge-related efforts, we should consider removing related collateral…


Hey El Pro,

I love Conti – great dev and thinker and a kind, good hearted person. But sometimes in life you have to call a spade a spade (or llama al pan, pan, y al vino, vino). Paper is doing exactly that with regard to Centrifuge, which is commendable to protect the state of our still-growing toddler protocol. I don’t believe we should interpret pressing Centrifuge as hostility; somebody has to raise the rankles and bring attention to this issue. Anyway, my two Dai.



Haha good one dude — haven’t heard that in a long time.

For sure—as I said before everyone has the right to their own personal opinion. I prefer to take a different route—i like to think of communities as amoeba clusters. An organism that can withstand any environment.

Strong culture of people with the same goal in mind—that works IMO. Within a community you’ll always have differences of opinion. And that’s fine. Like I said before — we hang-out in the same hood, but have on different shoes and different apartment views. :wink:

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@PaperImperium & @Tosh9.0 I would like to clarify something you’ve repeatedly misrepresented:

Centrifuge has been working and paying their own lawyers to work on this structure. The lawyers that were recently hired by Maker are reviewing the structure and serve as a third party audit and are not actually drafting any legal agreements. Centrifuge is paying for the continued work on the legal agreements. And as part of that work we will be addressing the comments by Maker’s firm.

@PaperImperium, I’m not sure why you continue to imply that Maker is footing the bill for all of this. Nowhere in @SebVentures’ report do you actually see him suggesting that S&S actually implement any of these changes.

As for the actual changes; we have already added some comments in the report above on how we plan to address them and will present the work as we improve the setup.

@spin Maybe I read too much into sentences like this. If so, then that’s wonderful news, and means we can all just comfortably pause while Centrifuge upgrades the legal structure.

I think we are not at this point yet. Let’s give Centrifuge a chance to update the legal protections to be more robust and more creditor-friendly

@spin would know better than I would, but I believe there was a major fundraising round at the time of the initial Maker financing. I don’t recall which investors were new with that round, however.

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I don’t get why anything would be paused as long as there’s a reasonable expectation that the pain points will be fixed. It’s not a smart contract situation where at any time a catastrophic bug could drain Maker nor an unknown counterparty that may run away at any time.

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So there are multiple catastrophic legal bugs. Remember that our SB barely covers the DCs already authorized. This is not an issue with a single pool but with an entire platform.

I had a banker tell me this week that this arrangement would never get past a credit committee at a professional institution.

Perhaps most importantly, the creation of a sound legal structure is supposed to be one of Centrifuge’s core competencies. Just like actually doing due diligence is supposed to be one of ours. Sanity checks clearly failed at both protocols.

This is a failure of process, and we need to address that before digging a deeper hole.

I think experience to date has shown us we do not have this reasonable expectation.


Never said that anyone but your team hasn’t paid for the legal structure – but I question the wisdom of MakerDAO footing the bill for any legal analysis regarding improvements on the current structure.

Anyway, I will be nice – whatever we can do to fix or improve the Centrifuge structure, it behooves us to do so.

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It goes without saying that we are not a professional institution with a professional loan committee which is why we are figuring this out the hard way. The massive execution risk is why MakerDAO/DeFi produces such alpha. We are at the embryonic stage of creating a more efficient loan committee that can rival such professional institutions.


Well a few points.

Yep. We definitely want to look at hiring people with experience here. The lack of this is one of the many reasons we are where we are. But as we pushed hard to get this going, now knowing what we lack and where we are it is prudent to pause analyze and get a game plan before pushing forward.

I don’t think anyone said we were paying for someone elses legal only that there were concerns in this process that we were having to do more work via legal opinions to cause modifications. I think this is par for the course. It is my hope the RWA CU gives decent reports isolating time/costs regarding productivity being consumed by the different players in this regard.

Probably that single reason to basically pause and hold here on DC etc.

I am still wondering what is critical path and seeing a list of what are the multiple catastrophic legal bugs are.

I can’t speak to this. It is a hope our RWA players are doing massive DD here. My impression is this is one of the prime reasons it took 6s so long to stage up.

Pretty much expected and commented on in my delegate platform.

We just need to attempt to be constructive while we move forward through difficult issues. RWA onboarding is about as big as doing Maker protocol itself. I expected this would take at least a year possibly two before we get to a confident growth phase with 3-5 RWA players.

Look forward to seeing that as well as general comments from the borrower side as to how we can improve this process. I suspect it has and is painful. Can only express apologies to New Silver and hope as we move through these difficult times, that everything in the end creates better structure and process for all players as well as MakerDAO. The hope here is the first players that passed through this - rite of passage - will be the first ones up for the larger DCs and ability to ramp business…

I personally have some concerns about how this process is evolving, potential undisclosed conflicts of interest, and equitable and fair treatments involving all parties.


I wonder who proposed a PPG RWA Committee to decentralize the RWA onboarding process. I wonder who was great at making it inefficient…

For now, no DC raise. I hope I will be able to provide more clear information going forward but I stand so far with what I said, most of the short term and the collateral agent.

We are also working with @luca_pro for an audit on FortunaFi. This might bring more points thanks to a different perspective.

This is what we are doing and is possible as Maker is making progress with RWA and was not possible earlier.

The details of the RWF CU expenses are disclosed in the monthly report so all will be public.

Ok. I read that and saw the members, but who is the committee head, where are the PPG RWA Committee reports, not just on New Silver but 6s and whomever else?

I have not been around so apologize for needing some spoon feeding to relevant posts on such things.

Ok. I am fine while we wait. 6s is coming up in next executive so we are still moving forward on a second player with a different legal structure. Would like to see a committee report (with matt ofc recusing himself) on 6s btw as we move forward.

The more the merrier. Though understand this costs time, and money. Look forward to seeing an audit report.

Seems like it was needed out of the gate. Reason for this was lack of a budget/funds to hire? I mean a post still should have been made as now 3 months passing you could have lined up candidates and been ready to contract when the funds became available. I wouldn’t be looking for just one but a couple honestly. Maybe 1 full time and 2 part time. :slight_smile:

It didn’t worked (but quite a time sink) and forked to something else. Still think this is key to Maker RWA. Maybe I should have be directive, but I wanted this committee to be independent.

Budget, momentum, and finding the right people.

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