[RBLD] MIP6 Collateral Onboarding Application - Real Estate - NEW

This is an MIP6 Proposal for the addition of Robinland’s tokenized real estate backed loans to Multi-Collateral DAI (MCD). This Proposal seeks a credit line to finance special purpose vehicles (“SPVs”) established by Robinland Holdings LLC or owners or affiliates thereof (the “Issuer”) which are used to finance a series of commercial real estate loans and collaterals of similar nature.

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

The asset originator is Robinland Holdings LLC as is represented by Scarlet Chen (@Scarlet_Chen, [email protected], Chief Executive Officer) and Venus Li (@Venus, [email protected], Chief Operating Officer).

The issuer will tokenize Robinland Portfolio Management LLC, which manages Project SPVs that are backed by commercial real estate loans as the underlying collateral, and issue on-chain crypto security tokens representing such underlying assets via Polymath’s infrastructure using the ERC-1400 (ST-20) protocol. Upon issuance, the tokens will be locked with MakerDAO’s MCD protocol to serve as collateral.

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

Robinland is a financial technology firm that provides a new financing solution to the real estate industry by channeling liquidity from DeFi lenders via blockchain technology. Robinland acts as a bridge between traditional finance and DeFi: by digitization and tokenization, Robinland turns real world assets, namely real estate project backed debt assets (e.g., Private Notes) into on-chain crypto tokens that can be used as collateral to access liquidity from DeFi-lenders (e.g., MakerDAO).

This innovation benefits both parties: for real estate developers, this is a much faster, cheaper, and hassle-free way of accessing liquidity; for DeFi-lenders, this is a scalable technology allowing them to include high-quality interest-bearing stable real world assets into their collateral pool, enhancing the stability and credibility of their lending facility. Robinland’s ultimate goal is to build a fintech ecosystem for tokenized real estate projects, which will provide the full spectrum of blockchain-based financial services worldwide.

One of the biggest problems with the US housing market is the affordability crisis, which can largely be traced back to restrictions on construction, including not only land use regulations, but also restricted financing for developers. Traditionally, real estate developers can seek financing from three sources: banks, real estate PE firms, or crowdfunding platforms. However, each source has its drawbacks:

  • Banks have rigid requirements for extending financing to construction since the 2008 financial crisis, and as a result, many projects that have good fundamentals, i.e. generating a steady flow of rental income, do not get financed or suffer from a very restrictive LTV ratio.
  • Real estate PE firms, however, do not always act in the best interest of the developer or the community, but rather its LPs: when a private equity fund invests in a project, it typically holds a super-majority of the equity and therefore the governance rights. Ultimately, the investment fund can take over the property and kick out the developer.
  • Crowdfunding platforms are an innovation over the past five to ten years, but they are fundamentally (“legally” speaking) no different from any 506b, 506c real estate PE fund. After all, it’s an innovation more for real estate retail investors than for real estate developers.

Robinland, instead, will introduce a completely new financing alternative for real estate developers: accessing liquidity from DeFi lenders by tokenizing their high-quality interest bearing projects into on-chain crypto tokens and pledging them as collateral. Robinland’s role is two-fold:

  • Technology provider: our team’s expertise in real estate fund raising, legal requirements, and the blockchain space allows us to become a one-stop-shop for connecting the real estate space and blockchain DeFi space, from the legal process required to pegging real estate projects to on-chain crypto tokens, to the issuance and distribution of tokens, to the interaction with Maker’s protocol.
  • Quality controller: by cooperating with only the best real estate partners in the industry and having a data-based internal evaluation system, Robinland acts as a gatekeeper to ensure that projects that get on the chain are of the highest quality. These projects can then be safely used as collateral by DeFi lenders, strengthening the stability and security of the system.

Maker will be one of the many capital sources used by Robinland, which is to the benefit of both Robinland and Maker: on one hand, Maker will know the details of the loan and have the opportunity to adjust its rates accordingly, which allows Maker to stay competitive. On the other hand, multiple sources help Robinland grow the size of capital available for its lending services, ensuring stability and diversification.

The following infographics explain the proposed structure:

Illustration 1

Illustration 2

Illustration 1, from left to right: Robinland works with Crowdfunz, a real estate Private Equity firm based in NYC (5-year track record, 0 default rate, 10-20 projects financed every year). Crowdfunz sources real estate debt financing projects, conducts due diligence and project evaluation, and refers the projects to Robinland. If the project meets the criteria set by Robinland’s internal project evaluation system, then Crowdfunz underwrites the loan, and Robinland Asset Management SPV enters into a Service Agreement with Crowdfunz on that specific project. The asset originator, Robinland Asset Management SPV, then transfers the loan to a project SPV, e.g., Robinland (Delaware Series LLC - A) via a Service Agreement.

Illustration 2, from the top: The parent company, Robinland Holdings LLC, manages Robinland Portfolio Management LLC via an operating agreement, and the latter conducts token offering via Polymath’s infrastructure to issue RBL security tokens and locks them in Maker’s vault to access MCD. Robinland Portfolio Management LLC manages Robinland Asset Management SPV (introduced above) which is an umbrella entity that manages (and extends loans to) all the project specific SPVs. The SPV will lend to the commercial real estate loan borrower through Robinland Project Management SPV, who takes the role as project manager.

The proposed structure fulfills several crucial requirements:

  1. Default independence: since each project SPV is set up as a series LLC, the default (if any) of any single project will not be escalated further than the series LLC itself, thus will not affect the umbrella entity, Robinland Project Management SPV.
  2. Homogeneity of RBL token: instead of pledging CRE tokens that map to specific project SPVs, Robinland chooses to issue RBL tokens that map to the umbrella entity, Robinland Project Management SPV, which represents a diversified portfolio of real estate debt financing projects. This homogeneity ensures liquidity of the RBL token, as it’s not specific to any project, but rather represents the debt financing solution as a whole.
  3. Polymath as the blockchain infrastructure: Polymath is one of the biggest and most renowned infrastructure providers in the security token offering space. Polymath provides a full suite of services that allow users to create, issue, and manage digital securities on the blockchain. Its track record and technical expertise add an extra layer of insurance for the legitimacy and liquidity of the RBL security tokens. A detailed overview of Polymath’s technology stack can be found here.

Using the above proposed structure, Robinland would like to utilize MCD as a revolving line of credit to finance new project SPVs that finance commercial real estate loans. The Issuer expects to draw DAI up to its assigned debt ceiling in roughly one to thirty-six months and will seek an increase to its debt ceiling once 75% of the initial line amount is disbursed.

The commercial real estate loans offer several investment benefits including portfolio diversification, low to negative correlation with public equities and positive correlation with inflation. Compared with other debt investment vehicles, commercial real estate loans offer a short investment term (e.g. 6-36 months) with high interest income for getting exposure to high-quality projects and secured by high-quality collaterals.

The commercial real estate loans are used to finance development of high-quality large-scale commercial (apartments) and residential (condominiums) real estate projects in the New York Metropolitan area. The commonalities among these projects are five-fold:

  • Prime locations, e.g., one of the most popular areas in New York: Long Island City
  • Interest generating projects with stable cash inflow
  • Developers with high creditworthiness and loan track records
  • No superimposed liens from financial institutions such as banks
  • No environmental indemnification issues

The following case is a first lien commercial real estate loan that exemplifies such features:

Loan Amount: Total LTC 55%

Security: The security for the Loan shall be: (i) First mortgage on the Property, and (ii) Assignment of Lease and Rent; and (iii) Guarantor’s full-recourse guaranty; and (iv) UCC-1 Filing; and (v) Environmental Indemnification and Hold Harmless Agreement signed by both Borrower and Guarantor.

Loan Term: Twelve (12) months.

Option to Extend: Three extension (6 Months each) options available with 0.5% extension fee.

Interest Rate: The Loan shall bear interest rate at Eight and A Quarter Percent (8.25%) per annum.

Prepayment: No prepayment of the Loan Amount shall be permitted without the Lender, or its assigns, having received Twelve (12) full months of payment.

Interest Reserve: Six (6) months of Interest Payments to be paid in advance at Closing.

Default Rate: The lesser of (i) Twenty Four Percent (24%) per annum, and (ii) the Maximum Legal Rate.

Late Fee: If any amount payable under any Loan Document is not received by Lender within 7 business days from its due date, Borrower shall pay to Lender a late charge equal to Five Percent (5%) of such due amount.

Insurance: Borrower shall provide Lender with certificates of insurance evidencing that all insurance required under the Mortgage (“Insurance Policies”) is in full force and effect and in form acceptable to Lender in its sole discretion. Borrower shall covenant that the Insurance Policies shall remain in full force and effect throughout the Loan Term. Borrower shall maintain at all times, at the Borrower’s sole cost and expense, policies of liability and property (including business income and terrorism coverage) insurance, builder’s risk, law and ordinance insurance and other insurance coverage required by the Lender according to the Loan Documents. The Insurance Policies must be paid for the term of the Loan at closing. Lender, its successors and/or assigns must be listed as mortgagee, loss payee, and additional insured. All Insurance Policies shall be issued by insurance companies satisfactory to Lender having an A.M. Best Key Rating of at least A.

There are several desirable features protecting Maker’s rights:

  • Full recourse right: Recourse is the lender’s legal right to collect the borrower’s pledged collateral if the borrower does not pay their debt obligation. Full recourse means that in addition to the collateral, the lender can also seize other assets from the borrower to repay the debt. This means even in the event of default Maker will be able to fully recover the value of its lending.
  • Short loan term: Unlike in other types of financing where the loan terms tend to be 3-30 years, our commercial real estate loan terms range from 3-36 months, which means there is much less contraction or extension risks.
  • Credit Policy: Loan-to-value and debt-to-service-coverage-ratio are among the two most important metrics representing the health of a loan project. As seen above, the 50-60% LTV and > 1 DSCR are extremely healthy by industry standards.

3. Provide a brief history of the project

About Robinland

Robinland Holdings LLC (a Delaware company) was founded in 2021 with the mission to solve the liquidity and financing problem in the traditional real estate industry. Robinland serves as the bridge between Frad-fi and DeFi for real estate developers by transforming large real estate projects into on-chain crypto tokens which can then be used as collateral to access liquidity and financing from DeFi lenders.

The CEO holds a PhD in Economics from Stanford University, with a focus on the housing market, especially how financial innovations can reduce inefficiencies and improve welfare, and has previously served as CEO of another blockchain real estate start-up. The COO is a veteran in the real estate space, having served as regional head of marketing for two major real estate conglomerates and having worked on Reg A real estate public offering in the US. The CTO is a full stack engineer with 6 years of experience at Google building Gmail-scale enterprise products, has issued his own SocialFi token “ShibaCoin” (which came before SHIB), and runs an active crypto community. The General Legal Counsel holds a JD from University of Arizona and has 7 years of experience in corporate and financial laws; his experience includes supervising and managing token issuance and smart contracts alongside handling Reg D and Tier 1 Reg A offerings.

Robinland Holdings LLC has a strategic partner Crowdfunz, a real estate private equity firm in NYC with 5 years of track record, 0 default rate, and 10-20 projects financed every year. Crowdfunz sources and screens real estate projects, and refers them to Robinland. Thus, Robinland can focus on providing liquidity while Crowdfunz takes care of operational tasks such as loan servicing and due diligence. With Crowdfunz’ extensive experience and network, the deals sourced from it are of top level. Combined with Robinland’s in-house data-driven proprietary evaluation system, Robinland can focus on its comparative advantage: channeling funds from the DeFi space to finance real estate projects in the real world.

About Crowdfunz

CrowdFunz is a real estate private equity firm based in New York that integrates financing and investment. Since initiating its first real estate project in 2016, they have successfully issued 29 private equity funds for retail investment clients in the United States, totaling assets under management over $90 million.

Centered in the New York Metropolitan area, Crowdfunz continues to cooperate with commercial real estate projects across the US that see both potential for appreciation and a steady stream of income. In the past five years, Crowdfunz has successfully integrated various development, transformation, and value-added business opportunities for project owners and investors in the small-to-medium-sized real estate sector in New York.

About Polymath

Polymath is a blockchain technology provider founded in 2017, especially one of the biggest and most renowned infrastructure providers in the security token offering space, used for security token creation, issuance and offering, KYC, AML, etc. Polymath makes it easy to create, issue, and manage security tokens on the blockchain. More than 220 tokens have been deployed using Polymath’s Ethereum-based solution, and Polymath has also developed the open-source code for Polymesh, an institutional-grade blockchain built specifically for regulated assets. Polymath streamlines antiquated processes and opens the door to new financial instruments by solving the inherent challenges with public infrastructure around identity, compliance, confidentiality, governance, and settlement.

This is Polymath’s roadmap.

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.

Here is Robinland’s pitchdeck.

Robinland Holdings LLC’s mainnet deployment will be accessible via Polymath.

Technical documentation about Polymath can be found here: Github; Polymesh’s whitepaper can be found here (Polymesh is Polymath’s blockchain).

Robinland’s security token RBL is currently awaiting issuance. Once we gain initial approval from the Maker governance forum, Robinland will kick off the legal process, the last step of which is RBL tokens being issued.

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

Polymath has conducted several audits of its technology stack.

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

7. How is the applying collateral type currently used?

Robinland plans to tokenize portfolios of commercial real estate loans and issue crypto tokens which represent fractional ownership of the portfolio, giving the holder claim over the underlying cash flows.

As part of the integration with Maker, Robinland will issue RBL tokens to bundle all underlying tokenized real estate loan projects. Subsequently, these tokens will be used as collateral in order to produce DAI.

The Project SPV will be financed by issuing RBL tokens for 90% (or subject to Maker’s discretion) of the net asset value of the commercial real estate loans plus cash on hand from Robinland Holdings LLC. The Issuer expects to launch with 12 million DAI increasing to 15 million Dai when 75% of the initial line amount is disbursed. It will initially seek 10.8 million DAI from MakerDAO, increasing to 13.5 million.

The Issuer expects to invest in commercial real estate loans that have an average value of $500,000 to $1,500,000, and the projects are expected to last 6-30 months and can be extended for another 6 months. Upon completion of the loan term, the Issuer will repay the outstanding balance drawn against the commercial real estate loans and accrued interest thereon. All of the loans in the pool will have similar risk characteristics including high quality underlying projects, short investment periods, full recourse right, etc.

The Issuer will provide MakerDAO with a put option, which it can utilize if it ever needs to liquidate. After the first 6 months, MakerDAO will have the right, but not the obligation to sell its ownership of RBL tokens to the Issuer, in whole or in part, upon 90 days notice. The Issuer will work in good faith on a best efforts basis to find one or more buyers to purchase RBL tokens from MakerDAO if it successfully sells the RBL tokens to a new buyer. If the RBL tokens are not sold within 90 days, then the Issuer will have another 90 days to sell the tokens. This process will continue until the Issuer has fulfilled the MakerDAO’s sell request.

The Issuer will seek a lower Stability Fee from MakerDAO because 1) the Stability Fee is variable versus the bank rates, which are fixed; 2) MakerDAO has a put option; and 3) the Issuer will be taking early stage risk versus taking a loan from the bank.

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

Robinland Holdings LLC will bear legal responsibility for the collateral. The jurisdiction is the state of Delaware.

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 RBL security tokens issued by Robinland Portfolio Management SPV are used purely to gain financing from Defi lenders such as Maker and will not be traded on exchanges, thus, there will not be “exchange for the asset.”

Robinland might consider issuing security tokens from each underlying project SPV for sale towards retail investors in the future, but the legal structure of that is still in progress and will be shared with the Maker forum for approval when ready.

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.

Please see legal opinions from Robinland’s general counsel here.

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.

Please see legal opinions from Robinland’s general counsel here.

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

Upon project referral from Crowdfunz, we have three types of oracle data sources. First, as a mature real estate private equity firm, Crowdfunz will perform due diligence on the project and the underlying assets. If the project meets their qualifications, they will pass the detailed information to us.

Second, Robinland performs an independent assessment of each real estate debt financing project which is subject to tokenization and subsequent loan disbursement. Robinland calculates the value of the real estate debt financing project behind the tokens in the loan application. It provides an estimate of the value based on its characteristics, e.g. underlying asset type (commercial vs residential), location, size, loan term, LTV, DSCR, existence of full-recourse rights, etc. This number is used to calculate the lending parameters. If the real asset debt financing project has to be sold, the assessed value can be used to determine the minimum amount to be made on a sale.

Third, a third party appraisal company is hired to determine the underlying value of each loan project. Members of our team have experience working with world-class global real estate consultancies such as CBRE, BakerTilly, JLL, and Cushman & Wakefield. We will use them as our certified data resources.
The value of the security tokens issued by Robinland Portfolio Management SPV is the sum of the value of all such project specific SPVs, which each equal to the value of the underlying loan asset based on the third party appraisal report. Furthermore, these projects will be reassessed on a regular basis. All the documents produced in the process will be made available to the appointed auditor.

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

We have three layers of protections for Maker in the liquidation process for the proposed collateral type.

First, as mentioned above, the Issuer will provide MakerDAO with a put option, which it can utilize if it ever needs to liquidate. After the first 6 months, MakerDAO will have the right, but not the obligation to sell its ownership of RBL tokens to the Issuer, in whole or in part, upon 90 days notice. The Issuer will work in good faith on a best efforts basis to find one or more buyers to purchase RBL tokens from MakerDAO if it successfully sells the RBL tokens to a new buyer. If the RBL tokens are not sold within 90 days, then the Issuer will have another 90 days to sell the tokens. This process will continue until the Issuer has fulfilled the MakerDAO’s sell request.

Second, Maker is one of Robinland’s capital resources. Robinland will also obtain a credit line from the bank and set aside a reserve fund. Having several capital sources will allow Robinland to liquidate or refinance loans. Moreover, the loan can be sold to third parties specializing in loan purchasing. Robinland loans are collateralized by high quality assets and enable buyers to diversify their portfolios and expand their risk strategy.

Third, when liquidation is triggered, Robinland Series LLC will act as the project manager and force the underlying project to execute the foreclosure process. The full recourse rights include but are not limited to going against the borrower for the amount by which the sale of a repossessed collateral property falls short of the principal outstanding on the loan. The project manager then goes back to the borrower personally in an attempt to collect any excess of the loan amount above the net proceeds from foreclosing on and selling the property.

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@Scarlet_Chen Point 8. consists of two questions. Can you confirm that the answer to the second question is Delaware?

Hello there, and Thank You for posting this MIP6 application. As someone who followed Polymath back in 2019 and eventually gave up on their quest for popularizing Security Tokens, I now see that they have created their own blockchain called Polymesh—which recently went Mainnet—so, I guess these tokens will be wrapped and bridge over to Ethereum correct?

And since “Polymesh” is still working on building its UI, how do you plan on providing DeFi liquidity for the RBL tokens? As an example, will you create a Uniswap liquidity pool?

Also, it seems like the company (Polymesh) has registered in Switzerland versus what it used to be, a U.S. registered entity—but with regards to protecting this community, can you please explain how MakerDAO will be Senior Secured? I’m sorry if I missed it.

And last and not least—why do you think erc-1400 (security tokens) have yet to gain any traction, and what’s different this time?

EDIT:

Would you consider converting a portion of your USD credit line for DAI and locking it in a Maker Vault as a reserve? Just TOL :slight_smile:

Thank you in advanced!

Interesting project, how can I participate?

Yes it’s the state of Delaware. Just edited the post. Thanks for pointing that out!

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Thanks so much for the detailed questions! Please see answers below:

Q: Hello there, and Thank You for posting this MIP6 application. As someone who followed Polymath back in 2019 and eventually gave up on their quest for popularizing Security Tokens, I now see that they have created their own blockchain called Polymesh—which recently went Mainnet—so, I guess these tokens will be wrapped and bridge over to Ethereum correct?
A: We won’t be using their Polymesh-based solution; instead, we’ll be using Polymath Token Studio on Ethereum (https://eth-tokenstudio.polymath.network/) so that the security tokens we issue don’t need to be “wrapped and bridged over to Ethereum” as you mentioned.

Q: And since “Polymesh” is still working on building its UI, how do you plan on providing DeFi liquidity for the RBL tokens? As an example, will you create a Uniswap liquidity pool?
A: At the moment we are ‘2b’ only, i.e. getting projects from Crowdfunz, tokenizing them, then pledging the entirety of such tokens to Maker to get financing. In other words, there’s no ‘2c’ elements involved, and as a result, we wouldn’t need a ‘UI’ or provide a liquidity pool to complete our operations.
This is in fact our advantage compared to other firms who have ‘2c’ element because the regulatory restrictions and compliance requirements on ‘2c’ projects are much higher than pure ‘2b’ ones. The fact that we don’t have a ‘2c’ element means better protection for Maker.

Q: Also, it seems like the company (Polymesh) has registered in Switzerland versus what it used to be, a U.S. registered entity—but with regards to protecting this community, can you please explain how MakerDAO will be Senior Secured? I’m sorry if I missed it.
A: Registration in different countries means different legal jurisdictions. It affects the legal approach adopted in future lawsuits. The ‘Senior Secured’ loan is a position: when default occurs, Maker has the highest recourse right to claim liquidated damages. It is ensured by the type of real estate projects we onboard - first lien real estate debt projects with full recourse rights. At senior position, we packed all of our underlying assets under RBL and pledged to Maker.

Q: And last and not least—why do you think erc-1400 (security tokens) have yet to gain any traction, and what’s different this time?
A: As briefly mentioned before, we’re purely ‘2b’ at this stage. In other words, we wouldn’t need to solve the liquidity issue at the security token level, i.e. we wouldn’t need a large number of retail investors to frequently trade RBL tokens in order for our operations to go through. Rather, we are treating the security token issuance as a technology that turns off-chain RWA into on-chain native asset, and the point of this is to make it easy to interact with Defi native infrastructure/facilities such as Maker, so that real world borrowers, e.g. developers can access the financing from the Defi world.
Now, what happens when the lender (i.e. Maker) wants to sell these collateral (i.e. security tokens) if there’s no active secondary market? Robinland will act as an agent to help find buyers of such tokens, which fundamentally represent real estate debt assets, which has a very active market.
This also explains why ERC-1400 (security tokens) haven’t gained traction: unlike utility tokens, that are mostly homogeneous and thus are suitable to be traded on exchanges, security tokens represent real world assets who are often times non-homogeneous, and as a result requires an active broker-dealer or agent industry for it to gain enough liquidity. For example, shares in pre-IPO start-ups or second-hand cars or single family homes have such features: they are real world assets, have certain value, but they are hard to price, and are very non-homogeneous. There exists secondary markets for such assets, but they are usually heavily facilitated by broker-dealer/agents.
Such an industry doesn’t exist for security tokens yet, and this is precisely why Robinland adopts the approach of ‘actively helping to find a buyer of such tokens’ when Maker needs to liquidate rather than relying on placing such an order on a security token exchange and waiting for someone to show up to buy them.
You might feel surprised that tokens need ‘broker-dealer/agent’. But in fact, this is true for the traditional finance industry as well: there are types of securities, such as bonds of certain non-public (or even public) companies, certain treasuries, etc. that get bought and sold by traders/dealers calling potential clients. Even IPO shares go through such a process: the point of a roadshow before the IPO is for the underwriters (investment banks) to raise enough interest from large, institutional investors, such that when the shares debut on the secondary market, share prices have good performance. The portion of secondary market exchange traded shares that are bought by retails is actually quite low.
It’s a long answer to your question, but hopefully it helps!

Q: Would you consider converting a portion of your USD credit line for DAI and locking it in a Maker Vault as a reserve? Just TOL
A: Banks do not allow such behavior. We will set aside a cash reserve fund for liquidity.

Thanks so much for your interest! At the moment we’re pure ‘b2b’, i.e. getting projects from real estate developers, tokenizing them, getting finance from Defi lenders, so there’s not yet token sales towards retail investors. If you’re interested in (1) becoming part of the team, i.e. helping building our product (2) becoming our clients, i.e. supply real estate projects (3) investing in us, we’d love to get in touch! In the future we might create a new arm that does ‘2c’ business; we’ll keep you updated on that!

RBLD is aware the greenlight poll is open. To the extent that token holders need clarification on particular issues, please post questions below!

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I’m Scarlet Chen, CEO of Robinland. We’re in the process of the community greenlight poll about our MIP6 proposal and would love to reach out to see if there’s any question/concern we might be able to resolve and/or gain your support.

Robinland channels liquidity from Defi lenders like Maker to fund real estate development projects for a better physical world. Our team consists of real estate industry veteran, crypto native coder, and lawyer familiar with the legal process underneath a security token offering (STO, only process the SEC approves of to issue on-chain crypto tokens that represents real world asset). We tokenize real estate debt projects via security token issuance, and pledge the tokens with Maker to access financing. The projects are all first lien projects w/ full recourse rights, from developers w/ A ratings in NYC.

Compared to other proposals (some already approved) on the forum, our advantage is: (1) there is no retail investor involved in any stage, which mitigates compliance risk for Maker (2) there is no utility token or NFT involved in our process, only security tokens, which ensures 100% compliance w/ current SEC rules about securitization (3) we have in-house lawyers familiar w/ the STO process, and our COO has structured Reg D and Reg A fund in her previous career, which are the same underlying process of how we onboard a debt project at Robinland.

To alleviate any concern about track record: (1) our COO has been in the real estate industry for 7 years and been on both the buy side & sell side, structured Reg A/Reg D which are the same structure as how Robinland onboards projects (2) our lawyer has been in practice for 10 years on the same legal process (3) our real estate projects are supplied by Crowdfunz, a real estate PE w/ 5 years track record, 0 default rate, and 10-20 projects financed every year.

We’ve spent a long time & lots of thoughts putting together the proposal, read most of the proposals on our forum of similar nature, talked to 5+ lawyers about our structure, and received positive feedback from people who have been through the poll process. We truly believe that we’re bringing a better alternative to both parties (supply of projects and supply of liquidity) in this ecosystem.

We noticed that a large fraction of the community has voted ‘abstain’ which is why we’re proactively reaching out. We’re happy to respond to any feedback/criticism the community might have, as we believe we have the capacity to change our proposal in a way that accommodates Maker’s needs.

Many thanks for your time and we really appreciate it!

One of the feedback we got was ‘Robinland’s explanation of liquidation safeguards doesn’t make sense to me - they mention Maker having a put option on the RBL token collateral, but then explain this will be executed purely on a best efforts basis and basically Maker can only exercise the option if Robinland is able to find another buyer. I don’t see how this provides any protection.’

To address this:
’ Hi MonetSupply,

We’re Robinland, who submitted the MIP6 proposal here. Really appreciate your feedback! For the put option for the RBL tokens: key elements of it was borrowed from an approved proposal (peoples’ company) but we do recognize your concern. We want to emphasize that in case where Maker would like to execute the put option, we will ‘continue this process until Maker’s demand is satisfied’ so the process will continue until all of what Maker wants to sell is executed. The only reason why we didn’t promise a specific timeframe is that how soon the RBL tokens get sold depend on the market condition. In normal market condition, we don’t expect this process to be long, as these are security tokens that represent high quality loan assets generating steady interest returns. Robinland will not only reach out to institutional buyers, but also list them on popular security token exchanges such as Securitize, etc. Thus we are confident the sales can be executed successfully within reasonable timeframe.

Another aspect we want to highlight is the part on ‘Liquidation’ in the last part of the proposal. There are 3 layers of protection for Maker provided by Robinland. Most notably, given the real estate industry connections our COO Venus has (developed in her 7 years of career in the industry), we are in a network of buyers of such real estate debt projects, so if we were to sell the underlying asset, the sale can be executed quickly at reasonable price as well. So if we had to, we could also execute the sale of the loan such that we have the ability to buy back the RBL tokens.

Really appreciate your comment and hope the above addresses some of your concern!’

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Another comment we got from the delegates:

Hi MakerMan,

Thanks so much for your feedback! I’m Scarlet Chen, Robinland’s CEO, and I’m here to answer any question you might have. I wanted to clarify 2 things:

  1. Security tokens does not mean Reg D. Reg A allows any US non accredited investor to invest and Reg S allows non-US investors to invest. CeresCoin is a recent case where a crypto company was approved by the SEC to issue a Reg A fund.
  2. More importantly, retail investors are not involved in any stage of the process that Robinland is proposing. After tokenization of the real estate debt asset, Robinland will not sell the tokens to retail investors, but will pledge them entirely to Maker to access financing. In other words, all that Robinland does is a transformation of RWA into on-chain collateral, such that developers can access financing from Defi lenders to build a more sustainable physical world. This is actually an advantage of our proposal compared to other ones where retail investors are involved, because when there is no retail investor, compliance risk is minimal.
  3. This might bring question of ‘what happens if Maker wants to sell these security tokens’. In fact, MonetSupply has asked that question on his delegate platform and we’ve addressed it there. We’ve also posted the reply to our proposal.

Hope that this addresses your concern, and we’re happy to answer any other question you or the community might have!

Thanks so much @Patrick_J and @LongForWisdom for the info! It’s really helpful.

I’m Scarlet Chen, CEO of Robinland, which is going through the community greenlight poll process. We did notice quite a few delegates voting abstain, and after reaching out, we learnt that this is likely due to (1) Maker RWA onboarding process being in the transition process from MIP6 to the Arranger Model ( when can the maker community expect to see the Arranger MIP?) and (2) delegates would need instructions from the RWF core units with professional opinion to support a proposal.

Given that, I’ve reached out to the RWF core unit to kindly ask for a closer look, and would also love to provide a brief summary of our proposal here to highlight our key strengths:

We are Robinland, a bridge between Trad-Fi and Defi serving the real estate industry. We channel liquidity from Defi lenders like Maker to fund real estate development projects to build a better physical world. Our team consists of real estate industry veteran, crypto native coder, and lawyer familiar with the legal process underlying a security token offering (STO, the only legal process the SEC approves of to issue crypto tokens that represents real world asset in the US). We tokenize real estate debt projects via security token issuance, and pledge the tokens with Maker to access financing which then gets channeled to the developers (the ultimate borrower). The real estate projects are all first lien loans w/ full recourse rights from developers w/ A ratings in NYC.

Compared to other proposals (some already approved) on the forum, our advantage includes: (1) there is no retail investor involved in any stage, which mitigates compliance risk for Maker (2) there is no utility token or NFT involved in our process, but only security tokens, which ensures 100% compliance w/ current SEC rules about securitization (3) we have in-house lawyers familiar w/ the STO process, and our COO has structured Reg D and Reg A fund in her previous career (the same underlying process in an STO).

In terms of prior experience: (1) our COO has been in the real estate industry for 7 years and (2) our lawyer has been in practice for 10 years on the legal process behind an STO (3) our real estate projects are referred/supplied/underwritten by Crowdfunz, a real estate PE w/ 5 years track record, 0 default rate, and 10-20 projects financed every year. This is all reflected in the proposal we put together - We talked to a senior member of the Maker governance forum several times, and he said ‘this is far more superior than anything I’ve seen on the forum; lots of concerns have been addressed ex ante, such as providing Maker w/ a put option which I usually ask for in other proposals’.

In terms of risk control for Maker: (1) Projects that we source are of top quality (first lien + short term, i.e. 6-36 months) from our Real Estate PE partner in NYC with 5 years track record & 0 default rate (2) We only work w/ projects with full recourse right, meaning that the full value of a loan can be recovered in case of default (3) We provide Maker w/ a put option such that anytime Maker wants to sell the RBL tokens (the collateral), Robinland will work with best effort until Maker’s request is fulfilled (4) With the COO’s industry connection, Robinland is in a network of real estate debt project buyers such that whenever we want to liquidate the underlying asset, the sale can happen as soon as in a week at fair market value. We are also in the process of putting together a DST (Delaware Statutory Trust) structure, similar to that of the 6s capital model.

We’ve spent a long time & lots of thoughts putting together the proposal, read most of the proposals on our forum of similar nature, talked to 5+ lawyers about our structure, and also one of the major members of the Maker governance to get feedback. We truly believe that we’re bringing a better alternative to both parties (supply of projects and supply of liquidity) in this ecosystem.

We noticed that a large fraction of the community has voted ‘abstain which is why we’re proactively reaching out. We’re happy to respond to any feedback/criticism the community and/or you might have, as we believe we have the capacity to change our business model in a way that accommodates Maker’s needs. We believe that we’re building something that can not only diversify Maker’s collateral pool portfolio, is of minimal financial and legal risk, and also benefits our physical world. Many thanks for your time and we really appreciate it!

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We received extremely helpful feedback from @MakerMan and believe that our answer to that thread is extremely valueable to help the rest of the community understand the advantage of our model as well. Thus we are pasting it here as well (link):

Hi MakerMan,

Thanks so much for the detailed response! We really appreciate it! It’s the first time we received such detailed feedback which really helped us understand where the concerns are. Kindly see our answers below:

First, we would like to clarify one key difference between Robinland and other models, which is how we deliver Maker the senior position for its lending. In other models, as you mentioned, they acquire financing from other sources (such as from retail investors) who serve as the ‘first loss’ tranche. and give maker the ‘senior’ tranche:

For these projects, the underlying asset are the entire capital stack of a project (such as the Centrifuge case and the REINNO case). Even though it appears that the ‘structure’ has given Maker a senior position, the underlying collateral is more risky.

However, in the Robinland model, the ‘senior’ position of Maker is given by the underlying asset itself:

As you can see, our collateral pool consists of only the senior lien of a capital stack. Our senior lien debt also comes with full-recourse right over the entirety of the underlying asset, which is not something that other proposals deliver. In other words, we are actually more secure for Maker because the senior position comes from legal rights associated with the underlying asset itself rather than financial engineering.

Let’s raise a specific example:

  • Under other proposals: say for example there’s a project sized $1mn with $800k senior tranche tokens pledged to Maker and $200k ‘first loss’ tokens sold to retail investors. If the project defaults and only $600k is retrieved, retail investors lose all of their tokens’ value and Maker loses 25% of its collateral value ($200k/$800k).
  • Under Robinland’s proposal: we only finance senior lien debt with full recourse rights, meaning that Maker has claim over the entirety of the underlying asset and the right to go after the borrower personally until the value of the entire loan is recovered. Say a project is worth $1m, and its senior lien is only $200k, then we only get that $200k into our portfolio, and in turn to Maker. In case of default, we as the underwriter has the right to take any legal action to recover the full $200k (the individual is personally liable to repay the $200k in full).

Note: Another difference between us and most other projects is that we’re funding real estate debt while others funding equity. The first has intrinsically less risk than the second for various reasons: (1) easier to price (2) smaller ticket size (3) there exists an extremely liquid private-placement market for first lien commercial real estate loans (4) shorter time horizon (6-36 months instead of, say, 30 years) and (5) less value fluctuation correlated with real estate market conditions (i.e. less ‘market beta’).

Second, on the point w/ retail investors. One might be worried that ‘no retail investor involved’ brings risk to Maker because there’s not an active market for RBL tokens when it comes to liquidation. In fact, not having retail investors involved is a benefit to Maker:

  • First, the SEC is mostly (or almost only) concerned with projects dealing with retail investors. There’s a saying ‘there’s only compliance for retail’. As the regulatory environment tightens around stablecoins, the less exposure projects that Maker onboards has towards retail investors, the less compliance risk Maker has to deal with
  • Second, having retail investors trade the same token (RBL) as what’s pledged to Maker in its collateral pool means systematic risk in the crypto market can be passed on to Maker’s portfolio.
    • The underlying asset, first-lien commercial real estate debt, has very slow and small price movements (as a feature of that asset class). If RBL are solely pledged to Maker, Maker only has to deal with the value fluctuation of the underlying asset (commercial real estate debt), which is very slow moving.
    • However, if RBL tokens are also sold to retail investors, then changes in sentiments in the security token secondary market will also lead Maker’s collateral value to fluctuate. There are non-fundamental reasons in the crypto market that might lead to price movements of a real estate backed security token.
    • Having retail investors to trade RBL means Maker is exposing its collateral to risks both in the underlying asset market and the crypto secondary market. This might induce unnecessary offloading of tokens when there’s no change to the fundamental value of the underlying asset.

In fact, the team has contemplated another model (in previous iterations of the proposal) to (1) include retail investors in the structure and (2) potentially mimic other proposals in having 2 tranches, as follows:

As you can see, Maker’s funds and retail investors’ funds go into the same SPV to fund the project. If Maker prefers such a model, we can definitely amend our proposal to reflect that, but we believe our current plan is better for the following reasons:

  • As mentioned above, we believe this brings Maker more risk in the value of its underlying collateral, which outweighs the benefits in having retail investors in the case of liquidation (addressed in the next section)
  • If we are to offer such a structure + 2 tranches, we are legally obligated to offer retail investors choices of both tranches as well, and there might not be enough buyers interested in the ‘first loss’ tranche
  • Given the same underlying asset (i.e. one real estate project), if we are to financial engineer it to form different tranches, this means we need to create 2 different risk-return profile, i.e. carefully allocating the underlying risk & return into 2 parts. This is a job that requires much finesses, and based on what we see during the 08 crisis, a recipe for large systematic risk
  • Note: If ‘other sources of financing’ in the previous comment refers to banks, then it’s almost surely that banks will not take the ‘first loss’ tranche as they always seek the most secured part of a capital stack; if it refers to other Defi lenders such as Maker, then it’s unlikely that they have very different preference than Maker does, i.e. both would want the same tranche; if we are to seek financing from traditional lenders such as real estate PE, then (1) the very high return they ask for will put Maker’s tranche in danger as well (we will need to ask for higher LTV or lower rates from Maker given the same underlying risk) and (2) this also invalidates our mission of replacing traditional sources of financing for real estate developers

Third, on liquidation and why we want to create security tokens RBL. We are well aware of the fact that Maker can accept individual real estate assets as collateral and extend loans in the form of stablecoins. The reason why we decided to pledge RBL security tokens is two-fold:

  • Notice that RBL tokens are issued by Robinland Asset Management, an umbrella entity that holds all project-specific SPVs. This means we’ve turned non-fungible, heterogeneous real estate debt projects into a fungible, homogeneous token. This means RBL (especially as we have more projects funded) becomes a representation of ‘first lien commercial real estate loan’ in general
  • This way, RBL can be traded on security exchanges that are already out there, as it’s a very generic asset. Security tokens will grow to $162 trillion in trading volume by 2030. The volume of commercial real estate is $1 trillion, and that of residential real estate is $2.5 trillion per year. As you can see, having the tokenized version of the underlying commercial real estate asset pledged with Maker provides it an extra liquidation option: it can be directly sold in the existing security token exchanges, which has a much higher potential volume than the market of the underlying asset itself as this market grows.
  • However, in the previous response, we stressed the last resort of liquidity, which is that we as Robinland can execute the sale of the underlying asset to help Maker liquidate the RBL tokens it has on its hand. The reason why we emphasized that is because it is a strength of our team: with our COO Venus being in the RE industry for 7 years, she is plugged into a robust network of secondary market buyers of commercial real estate loans. We can place a loan as soon as in a week when Maker would like to execute such a sale
  • Lastly, we want to address Maker’s worry of ‘conflict of interest’. In New York, all mortgage foreclosures are judicial foreclosures (meaning that the foreclosing lender must commence and prosecute a lawsuit). We have to follow the foreclosure process complying with the relevant statutes, regulations, state laws, and local rules governing commercial mortgage foreclosures in state court in New York. Thus, the main reason to choose Robinland subsidiaries as the liquidation manager is simply because we will take care of the labor-heavy part of the work to handle the court and lawyers. After we finish the foreclosure process, we have the legal obligation to pay back Maker the amount we borrowed. The conflict of interest is not a concern as (1) the amount recovered is determined not by Robinland, but the court who acts as an independent arbiter (2) the amount recovered is completely transparent (i.e. open information) and (3) Robinland is required by the law to pay back the full amount recovered to Maker. If Maker prefers to take on the labor-intensive part of the process, we are more than happy to amend our proposal to reflect that, e.g. (1) let Maker appoint a third party to execute the sales and/or (2) let Maker appoint a third party to supervise Robinland’s execution of the sales of the underlying asset

Fourth, on the point of oracle data source, a third party appraisal company is hired to determine the underlying value of each loan project - world-class global real estate consultancies such as CBRE, BakerTilly, JLL, and Cushman & Wakefield. We will use them as our certified data resources. The value of the security tokens issued by Robinland Portfolio Management SPV is the sum of the value of all such project specific SPVs, which each equal to the value of the underlying loan asset based on the third party appraisal report. Furthermore, these projects will be reassessed on a regular basis. All the documents produced in the process will be made available to any third party auditor appointed by Maker.

Fifth, on the experience and track record of the team. What’s worth noting is that, even though it appears as if Robinland has no track record, the team members have been doing the same underlying operational & legal process in their previous career: the process of borrowing from Maker also involves putting together a 506b or 506c Reg D fund. Its partner, Crowdfunz, is one with 5 years of track record, 0 default rate, and $100mn value worth of assets under management. Our COO Venus worked w/ the CEO of Crowdfunz for years in their previous career. This is extremely relevant because the market, the type of asset, the business model, and the industry connections carries over to Robinland 100%; the only difference is that instead of raising funds from traditional sources, like a real estate PE, we’re raising from Defi lenders such as Maker instead:

  • Our COO Venus:
    • Structured 3 successful Reg D 506b fund, AUM over $100mn: $300mn Senior Loan Letter of Intent for real estate project during the peak of pandemic and rock-bottom of the RE market
    • Reg A: designed and structured previous employer’s first Reg A fund single-handedly and got approved by the SEC in 1 year (light speed by SEC Reg A standard)
  • Our project supplier Crowdfunz:
    • 5 years of track record, 0 default, over 50 projects financed, $100mn value under management
    • Over 4000 accredit retail investors as repeated customers with $20k min ticket size

To summarize, Robinland takes on all the heavy-labor and default risk (i.e. the downside) and provides Maker the upside (i.e. effortlessly including high-quality real world assets into its portfolio to diversify its own portfolio risk). We minimize the risk Maker takes on through both the design of our structure & providing the highest quality underlying asset:

  1. RBL represents fractions of a portfolio of loans; mutual insurance among the loans minimizes risk of the overall portfolio.
  2. The underlying collaterals are full-recourse right senior lien debt, which is more secure than any asset we’ve seen in other real estate MIP6 applications. The senior lien debt itself is equivalent to the ‘senior tranche’ in a capital stack MakerMan suggested. (See illustration in section 1 for details) The full-recourse right (again not present in other real estate MIP6 proposals) is the highest level of protection for real estate debt projects, as it means the entirety of the value of the loan can be traced back in the case of default. If we were to adopt the tranching method MakerMan suggested, defaults on the ‘first loss’ tranche can still affect the senior lien, as outlined at the end of section 1 in the example
  3. We provide 3 layers of protection for Maker: a put option (which we will execute until Maker’s needs are satisfied) for the RBL tokens; full-recourse right given by the underlying asset; Robinland’s industry connection with a robust secondary market for senior lien commercial real estate debt buyers
  4. We are taking on most of the labor-intensive steps in the process because (1) we have the right skillset, experience, and industry connections in our team to do so (2) which alleviates Maker from touching the dirty work (3) and achieves our mission of serving as a bridge between Trad-Fi and DeFi - as the financial service provider, we let all the transformation happen within, such that our partners - real estate developer & DeFi lenders can stay within their comfort zone
  5. There isn’t a concern over ‘conflict of interest’ as (1) all the valuation and audit of the loan portfolio is conducted by industry-standard third party consultancies such as CBRE, BakerTilly, JLL, and Cushman & Wakefield (2) Role of the liquidator is purely to execute steps according to judicial process and state laws and all documentations and data involved in the process is out in the public (3) which we are more than happy to let Maker appoint a third party to take on and/or let Maker appoint a third party to supervise such process
  6. In fact, Robinland’s role is similar to an Arranger: we’ve set up a structure that is robust enough to include a large number of commercial real estate debt assets, mitigating Maker’s risk as outlined above, and also saving Maker from labor-intensive work by taking on that in-house. This means we are a financial service provider that can serve as the bridge between Trad-Fi and DeFi specialized in the real estate industry for the benefit of both parties (project suppliers and liquidity suppliers)

At a more conceptual level, I see two ways of reducing risk for Maker (1) an automated system such as a DST structure (proposed in the 6s capital case) (2) high-quality inputs (e.g. first lien real estate debt that come with full-recourse rights) into such system. If I may, let me use concepts in Machine Learning for an analogy: a good model and good data are equally important for a good outcome, but if one has to choose, the input is more important (‘garbage in, garbage out’ principle). As a data science practitioner in the past, I also see that even at top tech firms, ML are usually done with very simple model, e.g. a 3-layer tower, plus extremely good data. When it comes to Real World Asset, the principle is similar: a very well structured system definitely is an extra layer of protection, but if (not saying Maker will, just hypothetically) the Arrangers lacked industry specific connections/knowledge and brought in underlying assets that weren’t of high-quality, the well-structured system would spend all its resources dealing w/ foreclosures and defaults. After all, a combination of a well-structured system + high quality underlying asset (brought in via industry experts) is the way to go, and if anything, having the latter is a more fundamental way of solving the risk problem.

That being said, we can definitely see why Maker might prefer a well structured system over picking-and-choosing of asset, as it’s easier (from a DAO perspective) to set up one structure and re-use it in all use cases, regardless of the underlying asset. The drawback is, as a result, such system has to be set up in expectation of dealing with the worst, even if it means the cost and complexity of such structure isn’t really justified in most cases where no default happened. We are also in the process of exploring a DST structure (evaluating its time and cost), and in the process of contacting the proposed Arrangers such that if and when the Arranger model is in place, we can move quickly to submit a new application under the new framework. However, we still believe that the currently proposed structure contain all the elements that ensure Maker’s risk control needs, and if Maker has concerns, we’re more than happy to discuss further and amend it to achieve an agreement!

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The Robinland team has been looking into the Real World Sandbox (RWS) report Maker SES put forth last Oct (discussion 1, discussion 2) and discovered lots of similarities between Robinland’s proposal and the RWS structure and would like to summarize it here:

  1. Robinland essentially serves as an Arranger based on the analogy of the Fed, commercial banks, and ultimate borrowers in the RWS report:

‘MakerDao is the sovereign issuer, conduits are vaults, and ultimate borrowers are the users of those vaults. MakerDAO, like the Fed, writes the rules at which ultimate borrowers can access those discount windows.’

As pointed out above, Maker wants to operate as the Fed, thus needs arrangers in the Maker Monetary System to conduct the operational side of the tasks (because the conduits are vaults, but the vaults cannot execute those tasks themselves). In the Trad-Fi world those conduits are commercial banks, or better authorized deposit-taking institutions who can handle money flows and heavy-operations. As pointed out in our proposal, Robinland already acts like an Arranger to conduct heavy operational tasks such as project selection, risk management, foreclosures and court hearings.

  1. Robinland brings stability to the Maker Monetary System by bringing in collateral that satisfies Maker’s requirement:

‘Stability as core value. There is another point of contact: MakerDAO, like the Fed, should have the stability of the currency as its core value. … It is therefore very important, in my view, to converge on a vision of what type of lender could or should Maker be in the real-world financing stack.’

Whether it’s the RWS model or the Arrangers model, the key concept here is to bring stability to the Maker Monetary System. Again as mentioned in our proposal, Robinland controls stability at the source of the capital stack by selecting only full-recourse senior secured loans.

‘Maker should aim at becoming the ultimate lender against the highest collateral quality, leaving the rest of the value chain to allocate other portions of the risk spectrum.’

As an example for ECB, Robinland’s model is a type of Asset-backed security (terminologies in Trad-Fi). The underlying assets consist of senior real estate loans, which consist of A, AA, AAA bonds in credit rating, which are mentioned in the RWS report.

‘Real estate loans are often characterised as secured loans with the first charge over the collateral and returns lower than other asset classes. In this lending category, real estate marketplaces are solving the problem of construction companies and entrepreneurs and enables them to access capital quicker and at the affordable borrowing cost. Real estate loans include mortgages, bridge loans, refurbishment loans, as well as development or construction loans.’

The above are exactly the type of projects Robinland is going to onboard: full-recourse senior lien projects by real estate developers with top ratings, to help us build a better physical world with fast and cheap financing. Robinland packs all of the senior loans and creates a security token RBL that is backed by the entire portfolio which brings further stability by having mutual insurance of loan projects against each other in a portfolio.

‘We have identified (1) short-term corporate loans…(3) consumer loans…and (5) bank loans as the credit types that are more easily accessible with our vision of Maker’s positioning in the lending stack. To those categories, we might add so-called capital markets ready credit products that are often based on large, highly institutionalised, corporate and real estate loans. When coupled with the appropriate access structure (more on this below), those credit types do not typically require intensive oversight and offer a good combination of manageable size, velocity, standardisation, and regulatory oversight to mitigate Maker’s impact in case of delinquency. Other types of exposures should be assessed on an ad hoc basis, but for those higher requirements in risk/ return terms should be required.’

Again the type of collateral Robinland is bringing on board is exactly what the RWS report is talking about - easily accessible, capital markets ready credit products. As mentioned in our response to delegates’ questions, the reason why Robinland chooses full-recourse senior lien real estate debt is precisely because it’s highly institutionalized and very standardized. There’s a robust secondary market for this type of collateral, so even when Robinland needs to offload the asset it can happen in a matter of 1-2 weeks.

  1. Robinland is precisely the ‘counterparty’ mentioned in the RWS report:

‘As we have discussed in Maker’s Best Position Within the Lending Stack, we do not envisage Maker to deal directly with the ultimate borrowers, but rather with wholesale intermediaries. This means that the underlying credit collaterals will come packaged in some way by one or more financial intermediaries that will be Maker’s main counterparty.’

This is precisely what Robinland does as it satisfies the (1) seniority in the capital stack (2) deals with the ultimate borrowers for Maker (3) act as wholesale intermediary (4) package the underlying collateral into portfolio to issue the RBL token (which is then used as collateral to access Maker’s financing)

‘It is the Author’s belief that acting as a super-senior, programmatic, lender of the highest quality collateral in passive partnership with sophisticated and motivated intermediaries could be consistent with Maker’s core mandate of protecting the DAI, as well as with the principles of economic sustainability, decentralisation and dynamism at the base of the project.’

Robinland is precisely such ‘sophisticated and motivated intermediaries’ who can act as quality controller, risk manager, and executor of real-world operational-heavy tasks. Robinland developed a proprietary Credit Risk Model for internal risk management. The goal of the Credit Risk Model is to assess the expected loss of Robinland’s entire portfolio of loans under different portfolio combinations and projected economic conditions in the near future, which we can share upon request.

Robinland’s measurement and collateral packing are highly matched with the recommendations mentioned in the RWS report. Robinland are the ‘sophisticated intermediaries’ who can bring value to the MakerDao community.

  1. Lastly, we are aware of Maker’s internal risk control, and we intend to offer Maker the safe harbor as a super-senior lender by creating a DST structure. We’re in the process of scheduling to chats with some of the key person behind the Maker DST structure put forth in the 6s capital case.

  2. The following is a bullet-point style summary of what Maker is looking for, and highly coincides w/ what Robinland mentions in its proposal:

'For this reason, after having identified the credit types that are more indicated as RWF collateral, we should do the same with the counterparties. There are a set of characteristics that associated with all counterparties, e.g.:

:black_small_square: Alignment of interest (and especially skin in the game)

:black_small_square: Regulatory status

:black_small_square: Geography

:black_small_square: Size (i.e. AUM)

:black_small_square: Track record, for both the management and the credit underwriting teams

:black_small_square: Management experience

:black_small_square: Ability to originate/ scalability (asset class specific)

:black_small_square: Ability to service (asset class specific)

:black_small_square: Credit performance management (e.g. managing arrears, recovery, seasoning)

:black_small_square: Data quality

:black_small_square: Investors/ co-investors profile

:black_small_square: Ability and proactivity to deal with the peculiarities of MakerDAO

as DeFi counterparty

Each credit type will have its own minimum threshold of quality for each of those characteristics, and it will be the underwriting teams’ responsibility to assess them.

Funding Structures

Typical funding structures. There are several structures that are common in the credit/ alternative credit markets – i.e. structures that are used by financial intermediaries to package credit assets to distribute them to other investors. Structuring becomes even more complex in the context of a DeFi-TradFi bridge. In TradFi, financial institutions access credit that hasn’t been directly originated by them in several forms; the list below, although not comprehensive, describes some of the most important, in order of complexity:

:black_small_square: Bond (rated) issued by the lending platform – using underlying credit as additional collateral

:black_small_square: Tranche (senior, rated) of a securitised pool of originated loans

:black_small_square: Share of fund, directly owning and managing the underlying credit

:black_small_square: Direct loan to the lending platform – using underlying credit as additional collateral

:black_small_square: Forward-flow of originated credit, sitting in a bankruptcy-remote special purpose vehicle (SPV)

Maker’s additional criteria.

The specific (non) legal and technological nature of MakerDAO requires additional criteria that should be assessed when evaluating an available structure, e.g.:

:black_small_square: Direct, non-intermediated, access to the collateral pool (in tokenised form)

:black_small_square: Engagement of external auditors regularly providing financial and business reviews

:black_small_square: Available, liquid, secondary market in support of a semi-automated liquidation

:black_small_square: Presence of junior investors or pari passu co-investors with credit servicing abilities

:black_small_square: Presence of mandated legal entities that might act in the interest of the DAO’

2 Likes

Thank you for this comprehensive application @Scarlet_Chen,

I am eagerly waiting for the conclusion of the greenlight voting. Personally, I am seconding @ElProgreso’s views and I am looking forward to help reviewing this application together with the rest of the RWF team, in line with the processes of checks and balances we have established internally within Maker.

I appreciate that you have reviewed the Sandbox work and that you find similarities with Robinland’s vision, This is one of the aspects that the team will assess in case the application passes to the next phase.

3 Likes

Hi Luca,

Thanks so much for taking the time to review our application & clarifications to it (in the form of replies to the original post) over the past few days. We really appreciate the opportunity to engage w/ the community and being able to be part of Maker’s mission to bring in high quality real world asset to strengthen stability of and expand the supply of the DAI. Looking forward to further engage w/ the assessment team in the months going forward!

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Thanks for everyone’s support over the past 2 weeks! We are thrilled to see that Robinland passed the community greenlight poll on Jan 24 with 58% yes. Special thanks to delegates @JustinCase @ElProgreso @MakerMan @ultraschuppi @twblack88 for providing feedback and/or support to our proposal either under the thread or on their own delegate forum, which helped us understand the concerns of the community which allowed us to address them in time. Special thanks to @luca_pro @g_dip @Eumenes @christiancdpetersen @mrabino1 @PaperImperium @teej @LongForWisdom @monet-supply @Nadia who helped us understand the whole onboarding process and pointed us towards Maker’s strategic directions such as Real World Sandbox and the Arranger Model which were extremely valuable in helping us to re-shape our proposal to adapt to Maker’s needs.

We know this is not the end, not even the beginning of the end, but just the end of the beginning. Robinland will continue to engage with the community and the core units to complete the assessment process, actively learn about Maker’s latest strategic directions, and adapt to Maker’s needs during the process. We truly believe we have on our hands a set of solutions that will be able to bridge the gap between traditional finance and DeFi satisfying demands and solving painpoints of both the project supplier and liquidity supplier to help build a better ecosystem!

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