Real-World Finance Core Unit Report - 2021-08

Real-World Finance Core Unit Report - 2021-08

August 2021 reporting for Real-World Finance Core Unit

Current strategy

(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.

Review

State of RWA at MakerDAO

August was a very active month for RWA at MakerDAO. 4 new collateral have been fully onboarded:

  • 6S vault (RWA001) has now a 15M DC
  • ConsolFreight (RWA003) has been created a 2M DC
  • HarborTrade Credit (RWA004) has been created a 7M DC
  • FortunaFi (RWA005) has been created with a 15M DC

Peoples Company (RWA006) has been added but with a 0M DC. Legal documentation is only begining.

New Silver is still the only one RWA with significant exposure on MakerDAO and continue to grow steadily.

RWA Pipeline

Solar X was approuved by Governance. Constitution of the lender-side of the deal (the Cayman Foundation) has started (KYC for the 3 service providers: secretary, director and supervisor). As soon as this is done a Delaware LLC subsidiary will be created in order to process create/perform KYC for the loan servicer, the escrow account and the broker account. Loan documentation will then be completed. The Foundation will start with simple articles of association while we are setting up everything before switching to the MIP58 version.

The pipeline remains strong and challenging to process. @williamr is taking care of the Centrifuge MIP6s while @philinje is managing Reinno and 120dB.

The on-chain securitization roadmap was published following the audit by Shearman & Sterling. Work has started on Centrifuge and New Silver side.

@christiancdpetersen continued the discussion on legal structures with a comparison. We published MIP58 -RWA Foundations a MIP defining the RWA Cayman Foundation structure and how MakerDAO can interact with such structures.

Finance

@Aes has published a roadmap and a call for feedback for Financial Planning & Analysis.

He also posted an economic analysis of the institutional vaults highlighting the significant opportunity cost.

Data infrastructure

As RWA is taking too much focus, we put the data front in sleep mode. This will delay RWA analytics improvements. There is also a Data Core Unit being incubated.

Team

We started a partnership with JST Capital. This is a first move to get channel with institutions interested in investing in on-chain securitization.

@luca_pro started an audit on FortunaFi on a project basis. Author of the Dirt Roads newsletter, he is an ex-Morgan Stanley and spent years on illiquid assets and alternative investment.

We are actively looking for a securitization talent to join the team on a full-time basis. More new on that in September.

@Aes will join the team full-time this month.

Public work

Team composition

@SebVentures - Full-time - Facilitator
@williamr - Full-time - RWA
@Aes - Full-time - Financial Planning & Analysis
@Philinje - Part-time - RWA
@jameskmccall - Part-time - RWA
@christiancdpetersen - Part-time - Expert for energy-related project finance and legal
@luca_pro - Part-time - RWA

Core Unit budget

You can find the ledger of the RWF Core Unit multisig here . 39,469.00 DAIs were spent, mainly on compensation.

Previous reportings

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