June 2021 reporting for Real-World Finance Core Unit
(no changes vs last month)
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 opportunities to consolidate the capital base. Such knowledge will also help Maker Governance make more scientific decisions.
New Silver is still the only RWA on MakerDAO and continues to grow steadily.
You can read the Post-mortem - New Silver - Executive summary change that details the issue we faced when New Silver changed the executive summary. We have improved significantly the process going forward. New Silver will ask for a Debt Ceiling increase to increase exposure.
All 4 Centrifuge-based RWA proposed to MakerDAO Governance were accepted but some Tinlake (following an audit) and legal (see the New Silver postmortem) improvements delayed the deployment. They should be onboarded in July (with the possible exclusion of Peoples Company SPV which is not live yet).
6S is still waiting on administrative finalization.
For SolarX, the risk assessment is delayed as we are discussing with them to improve MakerDAO safety by having more collateral at the beginning. It is our understanding that the community doesn’t want to take early project risks without having collateral.
The pipeline remains strong and we meet with plenty of prospects around the globe. We have started to work more closely with a major bank to refinance a native blockchain bond (MIP6 expected in July but no promise).
@Aes worked on a MKR compensation financial model to see what are the impacts of MKR distribution using a bear, base, and bull scenario. @LongForWisdom and @Aes then proposed alternative MKR compensation guidelines.
The new budget proposal for RWF (MIP40c3-SP12) was approved by MakerDAO Governance. That will give us the ability to expense for legal work and increase the team size to have more throughput.
Going forward, the focus will most likely be on forecasting the financials to give an overview of the impact of Core Units on the profitability of MakerDAO especially regarding the low rate environment we can expect going forward.
We have achieved to onboard three legal firms. Those firms are hired by the legal entity of the RWF Facilitator and not the DAO (which doesn’t exist legally speaking). They are (in the order of engagement):
- Ogier: Specialized in Cayman Island law. Great reputation in the Trust space.
- Latham & Watkins: One of the most reputable law firms internationally.
- Shearman & Sterling: Wrote an excellent guide on securitization.
While the first two are working on refining the Trust model, Shearman & Sterling will audit the New Silver (and all Centrifuge based collaterals) structure and most likely will suggest ideas to improve on-chain securitization of RWA.
On June 4th, Participation in the DeFi for StructuredFi workshop. It gave us exposure to a non-crypto audience.
The first brick of the new RWF data infrastructure is there. We have created some tooling and set up a PostgreSQL database.
Since the beginning of the year, we are using a mix of Dune Analytics dashboard and Google Spreadsheet which limits us in things we can do (mixing on-chain and off-chain data like RWA) and doesn’t scale well in complexity (a lot of error-prone copy/paste).
Like most RWF projects, evolution will be iterative. The first step will be to port all queries we have under Dune Analytics to the new framework. As you can see below, porting the first query was quite easy (<10 minutes) and is now available in Excel (or any SQL compliant front-end).
Moreover, everything is open source and RWF is happy to give access to the database to any CU that needs it or help them set up their own (cost is quite low < $500 / monthly).
- Post-mortem - New Silver - Executive summary change
- May 2021 Financial Report
- May 2021 RWA Report
- Addition to the preliminary 6S contract assessment
- RWF Data Infrastructure Github –
- Finance website
@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
You can find the ledger of the RWF Core Unit multisig here . 38,349 DAIs were spent, mainly on compensation then legal. More legal expenses (~20k DAI) were accrued during the month but not paid yet.