July 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 one RWA on MakerDAO and continue to grow steadily.
An executive to onboard 4 Centrifuge-based assets is still needing some MKR to be executed at the time of writing (5k MKR needed).
6S should submit a finalizing executive soon.
For Solar X, a compromise was find to secure the investment at the pre-development phase by adding the land as collateral.
The pipeline remains strong and we meet with plenty of prospects around the globe.
A significiant amount of MIP6 application where submitted:
The native Ethereum bond from a bank mentionned last month will have it’s MIP6 application end of September if approuved by its executive committee.
The main bottleneck is still on the legal structure front (see the research section).
@Aes updated the budget simulator. Even with some Core Unit proposals rejected, we are still not profitable. It is important to note that we are still generating cashflows, the difference being the MKR dilution (but we are remaining well below 1M MKR for the forseeable future). Some needed Core Units are still missing (tech ops for instance).
Research work is mainly on creating and improving legal structures for RWA.
An analysis was done on the Prudential treatment of cryptoasset exposures. Work will be done in August to provide an answer to this BIS consultative paper.
We are making significant progress on the Cayman Foundation structure. The key component of the structure is that it working in synery with MakerDAO through DAO Resolutions. We are at the third iteration of the Articles of Associations (to be shared in August) and a MIP to formalize the relationship with the Foundation will be published soon.
On-chain securitization is a strong RWA strategy of the Core Unit. The work we are doing on the New Silver audit is highlighting a path toward industry grade securitization. This will be an iterative path but will lead to liquid traded securities rated by credit rating agencies.
We will start by framing a roadmap and targeting low hanging fruits before moving to more complex improvments. The roadmap is expected to provide guidance to issuers on what are the milestones they need to achieve to unlock higher Debt Ceiling. For instance, currently, an independent director is needed to get above 5M DC.
- June 2021 Financial Report
- June 2021 RWA Report
- MakerDAO Budget Simulator as of 7/21/21 - Revenue & Cash Flow Forecast
- Real World Asset Legal Structure
- Pre-MIP discussion - RWA Foundations
- RealDAO Spv Concept
- Solar X: Preliminary Risk Assessment - Disbursement and Loan Terms
- Prudential treatment of cryptoasset exposures
@SebVentures - Full-time - Facilitator
@williamr - Full-time - RWA
@Philinje - Part-time - RWA
@jameskmccall - Part-time - Expert for farmlands
@christiancdpetersen - Part-time - Expert for energy-related project finance and legal
@Aes - Part-time - Financial analysis
@thedstrat - Part-time - Data Science
You can find the ledger of the RWF Core Unit multisig here . 54,857.98 DAIs were spent, mainly on compensation and legal.