Real-World Finance Core Unit Report - 2021-04

April 2021 reporting for Real-World Finance Core Unit

Current strategy

Our current strategy is to onboard $300M of real-world assets. While the long-term strategy is to simply invest in senior tranches of structured products rated by credit rating agencies, we recognize that it’s not currently possible in DeFi. We have a two-path approach. First, partnering with Centrifuge, we work on a smart-contract way of investing in structured finance. Second, we are investigating a Trust-based way to invest the MakerDAO balance sheet in the real world using real-world tools.

We also think that having a strong capital base (i.e. surplus buffer) will be important to disrupt the traditional finance world. As we recognize that people prefer to burn MKR while it’s seeing as cheap, we also work to inform the market and the community on the financial strength of MakerDAO. We think that if the market recognizes the financial prospects of MakerDAO, the MKR price will increase, giving more opportunity to consolidate the capital base. Such knowledge will also help Maker Governance make more scientific decisions.

Review

New-silver onboarding success

New Silver was successfully onboarded and accounted for $588k loans at end of the month. The etherscan transaction is here. We have tested increasing the loan and decreasing it. So far everything works as expected.

Others collaterals

While New Silver was the first step, the community is quite bullish on RWA. We will target a batch (3?) of Centrifuge-related RWA onboarding end of May or in June. Risk assessments will be provided shortly and we will onboard what the community wants.

On the Trust structure, 6S is providing some documents. We are also working with REINNO and UPRETS on another Trust-like path (@christiancdpetersen). We expect progress to be made shortly. This will allow us to onboard Trust-related RWA using MIP21.

Finance

A framework for valuing MKR was proposed by @Aes.

While we work on a forecast incorporating the workforce expenses, lack of clarity on the MKR compensation makes it difficult at this stage.
You can now have access to a Financial statement spreadsheet to follow financials month per month.

You can also find the usual monthly financial presentation of MakerDAO

All finance stuff are now aggregated in the finance website

Legal

We have started the onboarding of Arnold&Porter, a law firm that will advise us on RWA. The first focus will be an audit of the legal structures of New Silver.

Research

Work has started on a follow-up of Crypto-banking 101, dedicated to liquidity issues and solvency with relation to the DSR.

Besides that, I found more and more evidence that DeFi needs a clearinghouse system for stablecoin. The Suffolk System is one and the Scottish free banking era provide another one. Curve and the USDC PSM are initials steps towards this system.

Marketing & PR

While not the focus of this core unit, we still spend some time using our work to promote MakerDAO, mainly on CryptoTwitter.

New Silver onboarding also provided a nice article (actually it was not related at the beginning) on Coindesk and an interview on CoindeskTV. Centrifuge also cited us in an article in The Defiant and on their blog. We also were on a panel in a Centrifuge call.

Edi: And the April financials did produce a Yahoo Finance news.

Data infrastructure

No progress made this month

Public work

Team composition

@SebVentures - Facilitator
@williamr - Full-time contributor RWA
@Philinje - Part-time contributor RWA
@jameskmccall - Expert for farmlands
@christiancdpetersen - Expert for energy-related project finance and legal
@Aes - Financial analysis

Core Unit budget

You can find the ledger of the RWF Core Unit multisig here. 5,840 DAI were spent in April but most April compensations will be paid in the following days.

Previous reportings

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This is fantastic work RWF people! Thanks!

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Exciting stuff, and a huge part of the DAO’s future!

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I like this keep it coming.

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Love it! I think the community owes a great deal of thanks to Seb for these initiatives - the quality and transparency of the financial reporting goes a long way to giving investors confidence to invest in MKR and I believe is a large reason we’ve seen the price accelerate in recent months, outperforming AAVE, COMP, ETH, BTC by 2x+. I haven’t found another protocol in DeFi that compares.

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Awesomeness! It is not only a dream anymore. We’re go now :slight_smile:. Some more interesting stuff coming right out of the oven this month. Keep an eye out :rocket:

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Woohoo! Just noticed your cool RWF forum name badge. Cool stuff!

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I’ll take the solar installation, the farmland, and the freight receivables, please. Hold the mayo. But gimme the large fries.

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Is there any information on the legal structure/mechanism used for the loans through New Silver? I know the onboarding of Arnold & Porter was mentioned, but if there have already been transactions, what were the structures used in those? For example, if real estate was used as collateral, was there a security interest filed somewhere? Where (or to whom) would the collateral go in a worst-case scenario?

Apologies in advance if I missed this information elsewhere on the forum. Thanks

Hi @hollister3 , the mortgages and notes are assigned to the SPV (NS Pool LLC). So if New Silver is bankrupt that doesn’t impair the collateral.

The requested audit is to see if everything is done by the standards.

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Awesome, thanks so much. Super interesting legal frontier!