This is a MIP6 Proposal for the tokenization of supply chain finance assets as real-world assets (“RWA”) to MCD by Centrifuge, PandaCredit and NAOS Finance. PandaCredit originates and administers the asset collateralization using Centrifuge’s model and Tinlake protocol. NAOS Finance funds the TIN tranche from its liquidity pool.

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

PandaCredit , the asset originator, is represented by:

Centrifuge will provide the technology and the framework for bringing RWA to MCD. The main contact from the Centrifuge team will be Lea Schmitt @_LS and Martin Quensel

NAOS Finance serves as both a TIN investor and an asset manager bringing other TIN investors into the pool, and is represented by:

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

PandaCredit is seeking a long-term strategic partnership with MakerDao to build a substantial and diversified real world asset portfolio with fixed maturity contracts and in this case, income streams from fixed supply chain contracts. We are working closely with Will Remor (Due Diligence at MakerDAO) to help scale the RWA onboarding process with MakerDAO

To start out, PandaCredit is partnering with a supply chain company in the semiconductor industry to fund supply chain finance assets: accounts receivable and inventory. PandaCredit has a track record of providing financing to similar companies.

The company is a supply chain services company that currently services OEMs (Original Equipment Manufacturers) in the electronics and semiconductor industry. They currently support the movement of hundreds of millions of dollars of goods (primarily electronics) through their supply chain and are audited by customers from the Fortune 500 and their books are audited by a top 10 accounting firm (These will be disclosed with the RWF Core Unit during due diligence). It has been in operation for 30 years, and in the supply chain management business for 15 years and experienced 0% default within their supply chain management business.

The company has contracts with OEMs as a supply chain servicing agent and works with OEM-directed spend. It sits in between the suppliers and EMS (Electronics manufacturing services)/contract manufacturers within an authorized ecosystem. It not only helps with supply chain financing, but also moves the goods and is partner EDI/API-enabled wherever possible.

Unified planning as provided by the company to the OEM/end-customer provides benefits like:

  1. Less manufacturing downtime

  2. Less excess inventories

  3. Less inventory holding fees

The supply chain finance is backed by 3 things, as it comes from PandaCredit through the supply chain partner:

  1. Accounts receivable - once inventory is sold to EMS/contract manufacturer within authorized ecosystem

  2. Inventories – electronics and components that are required to build technology systems, which are sold to the EMSs/contract manufacturers

  3. Contract governing the business model are guaranteed by the OEM

Through a partnership with this service provider, PandaCredit is able to provide working capital financing in the supply chain, with an extremely high degree of confidence to collect in full, as demonstrated in the workflow below. The workflow below reflects a general inventory purchase, throughout the duration of a contract, with 2 additional considerations:

  1. Inventory purchasing could be one-time or numerous times during the contract. The timing of the workflow below is more reflective of a one-time inventory purchase (but the steps are roughly the same), and there will be ebbs and flows in the mix of accounts receivable and inventory in the lifetime of the contract. For example, for a one-time purchase, inventory financing is high at the beginning, and decreases over time as the contract manufacturers consume and pay it off every month.

  2. Because there are contracts with several EMSs, there are several purchase orders in play at any one time.

PandaCredit and its partner will conduct a thorough underwriting process, including risk assessment of the following areas:

Type of asset Type of risk Data to be reviewed/Potential mitigants
Accounts receivable Credit (elaborated below) Top 15 global EMS/contract manufacturers have mostly investment grade credit ratings, full range is from AA- to B-.
Geography EMS/contract manufacturers are based on major global manufacturing countries
Operational Contractual protections or contractual obligation to be consumed by OEM or customers
Inventory Demand, Pricing Contractual obligation to be consumed by OEM or customers
Physical Warehouse/marine cargo insurance, and housed in authorized and secured warehouses
Legal Contractual passthrough product indemnities and warranties in accordance with existing agreements
General Execution Historical performance, customized internal system controls, weekly touchpoints with OEM and other supply chain partners, E&O insurance
Financial Contractual structures, exit clause requires OEM to fully consume in event of Company default

The counterparties from the credit risk assessment point of view are the OEM and the contract manufacturers. The OEM guarantees the consumption of the inventories and will be a company within the Fortune 500. The contract manufacturer manufactures for the OEM. and the manufacturer will be a company within the top 15 of global EMSs. PandaCredit assess these risks accordingly.

Type of asset Credit risk of counterparty
Accounts Receivable Top 15 EMSs (mostly investment grade credit ratings, full range is from AA- to B-)
Inventory Fortune 500
Contractual Fortune 500

This collateral application uses the Centrifuge model and proposes the DROP token [PA-DROP] of Panda Credit’s asset pool as collateral. A detailed overview of Centrifuge’s technology stack can be found here.

Legal Setup

The supply chain company will create an SPV in Delaware that sits in between PandaCredit and the supply chain company and will be independently run to ensure risk exposure only to the supply chain company as well as bankruptcy remoteness (via 3rd party director or other methods determined with Legal Counsel) to protect debt holders. The Issuer is the supply chain company, and PandaCredit is the asset originator. The SPV will own the contract with the OEM (counterparty is the OEM). The SPV will enter into an agreement with the supply chain company for supply chain operations. The SPV will enter into a service agreement with Centrifuge to get support from Centrifuge while using Centrifuge’s open and decentralized infrastructure. The SPV will tokenize the underlying supply chain finance assets (a mix of accounts receivable and inventory) into NFTs and will add those NFTs to Tinlake as collateral. The SPV will utilize Tinlake to issue PA-DROP and PA-TIN backed by the pool of NFTs that are locked in Tinlake. NAOS Finance will purchase the PA-TIN tokens. Find the documentation for the two-tranche structure here.

3. Provide a brief history of the project

About PandaCredit

PandaCredit is a Singapore based fintech company founded in 2017, and is funded by Alibaba Group (NYSE: BABA), 500 Startups and Fosun Group (HKG: 0656). PandaCredit has obtained financing licenses in 4 of its major markets and is governed by local financial regulatory authorities. With operations in Singapore, China, Indonesia, Vietnam, Philippines, India, United States and Mexico, PandaCredit has a team of 150 professionals globally.

PandaCredit has built a data driven lending platform providing individual and enterprise clients secured and easy access to capital, it has disbursed over US$180M to a large network of corporate clients. The team at PandaCredit are seasoned fintech veterans responsible for over US$5 billions of loan disbursement in China between 2012-2017, and they are bringing years of experiences in rigorous risk management and asset evaluation to the world of decentralized finance.

PandaCredit is now partnering with Centrifuge to explore funding RWA with DAI through MakerDAO.

About Centrifuge

Centrifuge provides the infrastructure to allow transparent and secure onboarding of RWAs to MCD. New Silver was the first asset originator to back DAI with RWA using the Centrifuge model. Panda Credit is one of many projects currently in the pipeline to help MakerDAO scale RWA backing to $300M by the end of 2021.

About NAOS Finance

NAOS Finance is a DeFi lending protocol allowing lenders and corporate borrowers to facilitate permissionless and borderless loaning/borrowing transactions on the blockchain. For this application, NAOs is both an investor into TIN and also an asset manager bringing other TIN investors into the pool.

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.

PandaCredit’s mainnet deployment will be accessible via tinlake.centrifuge.io

Technical documentation about Tinlake can be found here: https://github.com/centrifuge/tinlake and the Maker specific implementation here: https://github.com/centrifuge/tinlake-maker-lib

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.

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

Centrifuge Discourse Forum

7. How is the applying collateral type currently used?

The SPV will be financed by issuing DROP Tokens for 85% of the net asset value of the pool of NFTs plus cash on hand (collectively “Pool Valuation”) and TIN Tokens for 15% of the Pool Valuation.

PandaCredit will initially seek 20 million DAI from MakerDAO, increasing to 50-100 million over the next 6-12 months.

PandaCredit expects to use the funds to fund a smaller supply chain finance contract within the above-mentioned supply chain finance partner: a mix of accounts receivables and inventory. The tenure depends on the life of the contract, usually 1-5 years. This will be for either an inventory purchase & depletion model where there is a one-time purchase of inventory then depletion, about one turn per year of inventory or a slower turning inventory depletion model where there are multiple purchases for depletion, about 2-3 turns per year. The Issuer will repay the outstanding balance drawn against the supply chain finance NFT and accrued interest as it receives payment. All of supply chain finance within a contract will have similar risk characteristics including a high-quality OEM partner, OEM-approved ecosystem of suppliers and contract manufacturers, with the above-mentioned risk mitigants.

The supply chain partner has a proven long term track record in supply chain financing, having been in operation for 30+ years and has funded $6bn+ over the past 15 years.

If everything goes smoothly, the Issuer will add more supply chain contracts of similar quality. For example, for its much larger deals, the supply chain partner is able to obtain bank financing at under 2% for 85% of the financing needs, and will look to fund the mezzanine balance of 15% through this structure later and eventually remove traditional bank financing from the picture and ask MakerDAO for a lower stability fee as its replacement. For now, PandaCredit will seek a slightly higher Stability Fee from MakerDAO than bank rates because 1) MakerDao is taking part in the mezzanine level debt and 2) the TIN tranche will be covered by NAOS Finance.

Other details:

  • Supply chain contract: Encompasses any and all purchase orders during the life of the contract

  • Tenure: Depends on life of contract. Blend of accounts receivables (usually 30-60 days), inventory (usually 180-360 day terms with rights to extend), that varies across time within contract period (depletion versus ongoing)

  • Advance rate targets for both accounts receivables and inventory: 100%

  • Historic Default Rate: 0%

  • Deal/tranche details: DROP (Senior) 85% - MakerDao 75%, other DROP investors 25%, TIN (Junior) - 15% - variable apr

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

The SPV acts as a third party in which they would own the contract and collateral on behalf of the OEM, PandaCredit and MakerDAO. OEM guarantees contract consumption, and the supply chain company operates the contract to ensure compliance. There will be a party that oversees this SPV in order to receive instructions in case of default or other liquidation activities.

9. Where does exchange for the asset occur?

The SPV enters into a subscription agreement with lenders who receive 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.


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.

The issuance of DROP and TIN tokens is handled via Securitize, with AML/KYC procedures and compliance with US securities guidelines. Investors based in the US must be accredited investors (generally defined as having a net worth of at least $1 million). The SPV issues DROP tokens for the Maker vault, and Centrifuge will post legal discussion about potential implications for Maker.

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

We intend to use the same iterative approach the Oracle Domain Team proposed for the New Silver collateral onboarding. Cadence and extent of reporting will be defined with the RWF Core Unit and the Oracle Domain team. The supply chain company is regularly audited by a third party and audit data can be shared with the RWF team.

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



" is seeking a long-term strategic partnership with Maker Foundation"

Sorry if Im missing something here - why “Maker Foundation” and not “MakerDAO”?


Updated and edited! Thanks for catching that.


Can someone provide an ELI5 for someone like me who’s not as technical? It sounds like this is proposing that MakerDao add a token which somehow represents a real world assets. How does the token change in value with respect to real world assets being added/removed?

@thedstrat Please have a read at the centrifuge model and the MIP22 to get a greater insight into how the DROP tokens work for real-world assets.


great design

As to the credit ratings of the A/R debtors, it makes a world of difference how much of the pool will be AA- (decent investment grade) and how much will be B- (bottom basement junk). In traditional financing, negotiating points for investors would be to demand the asset originator only place A/R in the pool in which the A/R debtor is of a certain grade, demand that no more than X% of the total pool be related to A/R debtors below a certain credit rating or unrated, or demand that A/R related to an A/R debtor below a certain investment grade can only obtain some percentage less of a loan against it. If the pool is mostly BBB and above with a set small percentage to possibly be below that, then 85/15 makes some sense. If not the Tin portion should be much greater to reflect how risky this investment is. Any thoughts? Also, is the thought that both A/R and inventory financing would be part of the same pool, and if so what percentages of each? A/R has much quicker turnaround and thus less risk than inventory and is also easier to value ($100 owed a month ago is still $100 owed today, whereas a semiconductor part in inventory can become near worthless) and thus that too factors into whether an 85/15 split is appropriate.

Accredited investors in U.S. - have you prepared a private placement memorandum for such investors? Would you share it?

I have other questions on the structure and ability to liquidate (FYI 20 years U.S. commercial creditor rights’ attorney) but I am first completing reading through the Centrifuge memos, prior proposals, and at least one of the YouTube archive videos regarding the structure.


thank you!

Great questions!

On the contract manufacturers, they are all in within a ecosystem and have been vetted and approved by the OEMs (think Apple, Dell, etc.). And yes, they are mostly BBB and above.

For the proportion of A/R and inventory financing, it varies over time based on the contract. For a debt ceiling of 20 million DAI (in discussions with the RWF core team), it would be one of the smaller contracts which is either a one turn of inventory per year or 2-3 turns. For the former, it will start with all inventory, then as the contract manufacturer draws down on the inventory, it becomes A/R. The chart below should be a good visual representation, and the 2-3 turns will have more inventory spikes depending on when the inventory turns happen in the year.

Yes in general inventory is riskier than A/R but the OEM is ultimately contractually obligated to consume. If the quality or freshness of the product is not up to par, there are return rights and aging limits.

For the 85/15 split, we will discuss with the RWF core team, and it is ultimately up to the team to decide.

For the accredited investors in the US, there are some templates to subscription documents at the bottom of this link. Securitize is taking care of the accreditation of US investors and we will have specific legal documents which can be shared at a later point.

Hope that helps and thanks for the questions!


It may help the DAO (and me) to give some context why MakerDAO is an appealing partner for this vehicle…
Supply Chain + Traditional Finance = unnecessary cost/fees?
Supply Chain + Traditional Finance = slow payment rails?
Supply Chain + Traditional Finance = more strings attached, more red tape?

Please give a short value prop for people to really understand the importance of DAI within the supply-chain universe. Thanks ahead of time!


Not the applicant, but DAI can be sold on the market for dollars or for USDC which are redeemable in dollars

This is a good opportunity for me to use Yes and! On top of the reasons you mentioned above, I think of these others:

  1. More access: Doesn’t apply for this supply chain partner, but NAOS has many relationships with SMEs where it has been traditionally more difficult to get bank financing. And that is where financing truly make a difference: it could mean the SME surviving or not.
  2. Transparency in risk assessment: This has been traditionally a very opaque process which is tightly held in-house at traditional banks and financial institutions. We like the process here!
  3. Scale
  4. Diversification of funding: Always a good thing for borrowers.
  5. Rates: This is probably not right now, but DAI (and others) can be great alternatives to traditional bank financing at some point in the future in terms of lower rates to borrowers.

Yes, the fact that 70% of world trade is denominated in US dollars makes a soft dollar-pegged digital stable coin as a highly effective money alternative to fiat US dollars. Love the concept here. Thanks for elaborating.