Following the perspective from @mrabino1, the update from the autonomous working group and SC team, I thought it would be good to give a view on what happened on Maker side regarding RWA. The tone might be subjective.
I’m working on RWA since September 10th (2 months ago). It started like that:
I have time to take a project, but unsure what is best to be helpful. Don’t think I can do much regarding strategic reserves funds (MIP13 in progress). Is there something I can do to push RWA forward or is that worked at the Foundation?
I took a risk assessment template and … well … things got more complicated than expected. For a crypto assets, it’s mainly about liquidity and volatility. Good luck with that for RWA.
Just to name some elements:
- Legal stuff: RWA are using contracts and the DAO can’t sign them. How should we proceed, what is risky and what is not?
- Processes: Let’s say you do a deal. How do you monitor it? For a crypto-asset, you expect the market to do the monitoring and the price to reflect it. Doesn’t work for RWA. Centrifuge has a lot of data on the blockchain but we don’t have the infrastructure to monitor it. At some point, it will be built but for now, it will be some google sheets.
- NDA: Risk evaluators might need to sign NDA. Now how do you report to the community something you can’t disclose? How do you work as a team on a collateral without being able to share documents? We just figured last week that we needed a NDA template. NDAs are signed by risk evaluators themselves and they take the legal liability.
- Housekeeping: Now that we are a kind of team with @williamr, @Philinje and @Primoz we needed some tools (shared Google Drive, Trello) and establish meetings to coordinate.
- Community/Governance relations: Communicating and reading/analyzing all the forum RWA content (which is growing quickly).
For all that, @Philinje and myself are working part time on collateral onboarding grants, @williamr only got more dedicated recently on the subject. We are helped by a growing working group and by the risk domain facilitator @Primoz.
While growing the list of onboarded assets will be the most visible part, the most important one will be to build the needed infrastructure to monitor those investments, defining the processes and writing documentation (and MIPs).
As said here, currently, RWA are thought as B2B relationships (we deal with the asset originator, only one borrower per vault, heavy oversight) while crypto vaults are B2C (anyone can get a loan from the collateral). RWA are defined as illiquid while crypto assets are defined as quite liquid and easy to liquidate on the market. RWA are usually managed by a third party (asset originator) through a SPV so we can have both scale, diversification and lower risk (due to the equity part that takes the first losses).
There is a lot of work still to be done, a lot of unknown unknowns but I hope we can achieve something we will be proud of, and, let’s say 10M annualized stability fees at the end of next year.