Following a chat with delegate @Planet_X here are starting questions. Please feel free to ask any questions and I will update the first post of this thread.
0.a) A few words on the strategy
The view is that up to 300M DAI of RWA we are on at the experimentation/startup phase. The key is to learn what RWAs at MakerDAO should be and how to scale. We are building bottom-up.
When we will reach 300M DAI (that’s just a random number to give an idea) it will be time to decide how MakerDAO wants to move forward. DeFi itself is changing quickly so it is hard to know what will be the good path. Therefore our job is to experiment, build, and gives the tools for MakerDAO to chose the good path.
We are also expanding the team with people from TradFi as we are now credible in RWA. As stated I’m not going to manage a team of more than 7 people. Teej is starting this month with a background in CRE and CMBS. Therefore I hope to grow people wanting to spin off CU at some point.
We are also, in the background dealing with the thought questions. Who is responsible for making what decision? What do we mean by decentralization? We tried to open this question in the forums but did somewhat fail to attract interest (as it is still quite abstract). @prose11 is setting up a PPG, and we will leverage this group first (PPG on which, like the previous one, I don’t want to take any leadership to preserve decentralization). We will all mature with time on those topics (I can point to this, this and this among others). It will be done with time.
On our priorities:
@SebVentures : SolarX onboarding (RWA Foundation), On-chain securitization, MIP21 improvement, hiring and onboarding new members, prospect management, data
@williamr : RWA reporting, risk analysis of Monachil, PandaCredit/Naos and NebulaCapital/Tinka, improving the onboarding framework to provide more requirements for MIP6, developing a tranching framework to estimate risk/reward
@aes : Financial report, and FP&A roadmap
Teej : onboarding month, will learn all the legal structures and follow some onboarded projects (New Silver) and some analysis (120dB, REINNO)
@christiancdpetersen : SolarX onboarding (project-finance side)
@Philinje : REINNO, 120dB
@luca_pro : auditing the FortunaFi investment
1) Treasury or no treasury notes
There is an active discussion on this topic here.
As discussed, the Cayman Foundation provides a legal structure that makes such kinds of investments possible (there might be many other ways, but this one we have done the work). We are in the view that such an approach would scale nicely (I agree with @lev comment ). It should be noted that such an approach is less impactful than projects like SolarX.
The poll was quite a tie for a long time and moved in favor in the last few days. I recommend people voicing their opinion there.
The poll also goes more in favor of short-term investment-grade bonds which provide a sound mix of credit and duration risk. But I can only recommend the discussion to be continued in the thread.
This is an area where we will devote more time starting next month I guess. Most of the work we have and will do on SolarX will be reused.
Another brick that might be needed is a replacement for MIP21. More on that later this month.
2) project finance or no project finance. Or only if it suits us
SolarX was agreed on by the Maker Governance.
So far SolarX took a lot of time but not due to the project-finance part but on the legal infrastructure side. Now, @christiancdpetersen is really on the project finance part. There will be key learnings here going forward.
I must stress that project finance asks for more involvement. The solution is to have a third party handling the work (which was the initial plan with SolarX but we are starting with a single loan).
3) priority given to Centrifuge assets
We are at the experimentation phase so there is no priority on Centrifuge assets. It’s mainly Will that is working on them. There is a significant deal flow coming from Centrifuge. I’m also still working with Growth on a significant banking project (which might or might not go public later this month). This will also be a new hard problem to solve.
Priority is as much on onboarding collateral as creating the building block to make it happen. The problem for SolarX and REINNO was not so much the collateral itself but how to invest. Now there will be a blueprint for a Cayman Foundation and a Delaware Trust. But soon enough we will have the issue to diversify the structures and a need for an Irish Trust or something Singapore-related. And MIP21 doesn’t scale beyond the SB which is why work is needed.
In the past (when had more time to be proactive) we did reach to Goldfinch as they are also doing on-chain securitization. But they are using USDC and it seems that MakerDAO is not the top priority.
If Governance wants to be more clear on what they want, that might be done by not greenlighting a MIP6.
My personal favorite mix would be 1/3 on-chain securitization 5Centrifuge-like assets), 1/3 off-chain lending (6S, SolarX, REINNO, 120dB, bank, …) and 1/3 off-chain simple bonds/ETF investment (question 1). Then we analyze what we have learned on those 3 kinds and decide how to move forward.
4) 6s - hot or not?
6S is now live so we will sync with @g_dip RWA Co to incorporate their reporting. 6S is another kind of interesting experiment where the Asset Originator took all the burden to create the lender side structure. This is great in the sense that we didn’t have much to do. At the same time, we didn’t learn much (well the Cayman Foundation is a direct child of the 6S structure) and some trust is delegated to the borrower. I’m not sure how scalable that is. It works for the 6S case (as agreed by governance), but I’m not sure it would work for a random borrower coming to MakerDAO.
Nevertheless, the point is not that important. With @g_dip (for 120dB) we might swap the charitable trust component of the 6S structure for a Cayman Foundation under MakerDAO direction. That solves all the concerns our counsels have.
5) Thoughts on liquidity management for MakerDAO (by @g_dip link)
You are quite right that the only “contractual” obligation we have is to pay $1 per DAI at ES, nothing more. So DAI is kind of a perpetual bond with a 0% interest rate. That being said, we kind of like having DAI at $1 on secondary markets as well. This is why we have PSM which is short-term lending (indirectly). So liquidity (a pape I wrote on it) is of prime importance not for commercial reasons if not for “contractual” reasons. I guess we can still describe MakerDAO as lending long and borrowing short.
We’ve asked last year about maturity risk. It’s quite experimental right now as rates are low in the short term. The underlying idea is that for low scale (<300M) it doesn’t really matter.
But this is a problem that will come in the next few years. We will need a stronger asset liability management (ALM). But at this stage, I’m not even sure we agree on the MakerDAO balance sheet structure. And no one in DeFi can model the DAI holder behavior for the medium term anyway (it’s just too early). And all that is before DeFi gets a yield curve on stablecoins.
I think having an ALM committee at some point will be useful and have an easy way to tell the community what is the liquidity risk level of the protocol.
As always you can contact me by DM here or on rocket chat. Feel free to post questions below as well.