[Signal Request] Increase The MakerDAO NS-DROP maximum to 85% when AO TIN participation is at least 50%

The New Silver AO pool on Tinlake has been live for ~10 months and approved as the first RWA with MakerDAO for ~6 months. Total pool value is ~17mm DAI and MakerDAO’s debt is ~9.3mm DAI at the time of writing. Maker currently holds ~72% of the DROP share. There have not been any defaults or re-payment issues since the start of the pool, and this is currently the largest RWA pool.

Our current covenants call for a 105% overcollateralization and a minimum of 15% TIN (junior) tranche.

The AO is using technology and improved process to become a market leader in the short-term real estate lending space in the U.S. ($50-100b per year market), and is 100% focused on its’ partnerships with Centrifuge and MakerDAO to continue to originate high-quality debt, while adhering to strict underwriting guidelines. The AO is also putting additional efforts into bringing in various institutional and HNWI investors into the pool, educating the wider community and spreading the word about MakerDAO.

Therefore, given the seniority of the MakerDAO debt and many other protections, including borrowers’ equity on every loan, we hope the community would consider adjusting the maximum share of DROP tokens that the DAO is holding. We would like to propose increasing the maximum share from 75% to 85%, with the covenant that the AO will have 50% or more capital exposure in the TIN (junior) tranche. Currently, the AO has ~2mm out of ~3.2mm total TIN. If the exposure falls below 50% in the future, the covenant will revert to a maximum 75% DROP share.


  • Ability to add additional loans to the pool
  • Decreases risk impact of potential individual loan defaults with larger vault size
  • Increase MakerDAO revenue
  • Remove constraints while the outside investor base is being built up


  • Potential increased risk in case multiple loans defaults

Next Steps

This signal request poll will run for the next 2 weeks, until Thursday, November 4th. If a majority of forum voters (excluding abstain votes) are in favor, the proposed changes will be submitted for an on-chain governance poll the following week.

Should MakerDAO increase its’ maximum share of NS-DROP to 85% when AO TIN participation is at least 50%
  • Yes
  • No
  • Abstain

0 voters

Can you give us a little background on why NS would want a higher max on Maker-held DROP?

Is it that you’re having difficulty attracting other investors on Tinlake as quickly as you would like, or just a better cost of capital? Or both? Or something else?

If it’s speed of scaling, are you finding qualified borrowers who you must turn away?

If it’s cost of capital, wouldn’t a willingness to hold a majority of the TIN tranche suggest we aren’t charging enough?

With NS holding the majority of TIN and Maker already with majority of DROP, do we even need to do this on the Tinlake platform since it’s approaching a two-party agreement rather than a big pool?

Just initial thoughts and questions. Thanks.


Thanks for the questions @PaperImperium. We are doing this to give us some agility to move forward in case (and we are not certain if this will ever happen or not) we have larger loans or a volume that exceeds the current inflow of Drop. New Drop investors are coming in almost daily, and as expected, there are some withdrawals, so I suppose the best answer is that this would be a potential short term solution, in case its needed. We do not anticipate having challenges raising additional Drop, as you may have seen in my last update, we are hiring a capital markets person, and new investors are coming in on their own. Of course a (slightly) better cost of capital does not hurt either.

We have shifted gears recently to focus on institutional investors, as our pool gets larger, smaller retail investments move the needle less, and the investment minimum was lowered to 5k in order to give as many people who want to participate in this opportunity. We are viewing this request as a short term solution in case our pace exceeds ability to scale these institutional Drop investors.

In terms of TIN, we took on the additional risk because we want to show the community that we have strong conviction in what we do and are willing to risk a significant amount of our own capital in efforts to grow this together. We did not view the goal of that as primarily for financial gain.

Hope this provides some clarity, thank you.


Just to provide a bit of context, @prankstr25 came to us with this request and our proposal to ask an increase in TIN holding (as a ratio).

The 25% of co-investor was to protect the legal arrangement. The number was quite arbitrary and I suggest MakerDAO members (as some have) to co-invest in the pool to defend MakerDAO if need be. I have a meeting with Shearman & Sterling next week to study how to use the Cayman Foundation to own the DROP and solve this problem (discussed and approved last year).

Regarding DROP co-investors, all the future deals are with MakerDAO as the sole senior lender. Individual not really move the needle (I mean you need to KYC, easier to just ape into Klima and get rekkt) and it’s still early for institutions (especially no DROP custody support right now).

Tinlake allows us to be fully on-chain and not to have to deal with DAI conversion and custody it also brings some hard constraints on the waterfall. But you are right @PaperImperium , I think we should push toward having a real securitization ecosystem in DeFi, that will create competition for MakerDAO but also some huge wins (liquidity for instance). But we are really super far from there. It is the same problem with SocGen, we might join the ecosystem but unlikely that it will be a big one for years.


I abstained here simply because I don’t feel I am getting enough information to make an informed choice. I am seeing this more and more btw. I really want at least one and preferrably more CUs to step forward and give information to help us understand the implications of yes/no choices, both from risk, to growth, to legal, financial on these deals/changes.


Sure, what information do you need?

You have the pros and cons which are correct in my view. My view is that it doesn’t change anything really significant. @teej that dealt with the matter can add more color maybe. Or @Primoz to provide a different risk perspective.

Per the risk assessment validated by MKR holder, New Silver should hold $40k of the junior tranche that protect Maker, the new rules would mean they need to hold 50% of TIN. They have currently 2,000k so they validate that already.

I mean, this doesn’t seem unreasonable. Maybe let’s see if anyone has any objections while the SR is up.

Where are we at on upgrading the legal infrastructure over at Centrifuge?

Work with Centrifuge is still underway. A new version of the document was delivered this week and is under review.

For Peoples Company, changes in the Executive Summary are now with written consent first. This work for this pool and probably not for all.


Centrifuge is in discussion with many trustees, but this will take time to be onboarded due to the on-chain nature.

The part I’m the most excited about is really to have the legal ownership of DROP to an RWA Foundation (or whatever structure). Then asking for a security interest in the SPV membership. This would allow the RWA Foundation to take ownership of the SPV if things turn bad. This is a new idea taken from the SolarX deal.

BTW, maybe we can get the DAI Foundation to invest at least a bit (a few DAI) in those DROP (ping @sorenpeter ). This is another value of securitization, we can decentralize ownership easily.

What I want is a list of pros and cons based on vote.

  1. If no (pros and cons of this from your seat).
  2. If yes (pros and cons from your seat). and ideally
  3. IF YOU were to vote or have any preference of vote outcome - would you vote yes/no or want the vote to go yes/no and why?

Just listing pros and cons doesn’t tell me the implications of a vote outcome from your point of view and this is exactly what I am expecting from CUs.

In fact if I were to talk about the panel of experts I believe I would like the above from all the CUs on virtually every proposal. It doesn’t have to be detailed and can something like ‘no impact, no opinion, etc’

My problem here with all of this as @iammeeoh has posted elsewhere is that CUs are acting only as facilitators that bring stuff forward or have to deal with stuff. I believe another CU responsibility is to comment on all proposals one way or another according to the basic 3 questions I listed above. Someone may have some more ideas on what they might want but without anything like the above from CUs on these proposals I as a delegate have only my own devices to figure out how to vote. This isn’t just time consuming it basically leads to completely uniformed polling choices.


So let me be clearer. I would vote yes (changed my vote) as it’s really without any meaningful consequence (“doesn’t change anything really significant”). I said that “The number was quite arbitrary” (the original 25%).

Regarding being facilitating, I guess that is the job (I’m a facilitator). I should let governance do the decision-making based on fact (hey scientific governance all that) and just avoid any stupid change going on-chain as an emergency measure. This is a discussion that should be done elsewhere but is quite important. That governance spends time on such a signal request is useless.

RWA Committee members should maybe act as a first filter. I don’t know.

Would encourage more people to vote on this before I close it later today.

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Have the major issues with the legal arrangement been addressed?

If so, I think this request seems reasonable. If not, I will move to oppose it until there has been more progress on legal restructuring (and would encourage New Silver to resubmit this request later).

Look forward to an update.

CC: @spin @SebVentures

I wholeheartedly agree – unless the issues as highlighted over an incredible amount of thorough posts are addressed and fixed, we should reject this request (and those with a direct pecuniary interest in seeing it pass should abstain…).

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Unless there has been a change to the legal structure I am unaware of, Maker needs other DROP holders similarly situated who are better placed to complain and take action. My vote is not a comment on New Silver generally.

Understand there have been no defaults, but would the running balance show there were payments of SF that could not have come from additional loan advances? In other words, is New Silver still drawing on the DROP/Maker line?


I agree with this take here. And what worries me even more is that Centrifuge and others have a pipeline of deals waiting/stagnant–yet–we still have not dotted the i’s and crossed the t’s. We need guidance, and it was needed yesterday. Please let’s provide the “Borrowers” the reassurance, a.k.a the vote of confidence–that MakerDAO is here ready, willing, and able to do business under a Maker Community accepted legal structure.


This proposal was rejected at the end of polling yesterday. If people would like to see these changes (or similar ones based on community feedback) there will need to be a new signal request. Please let me know/comment here is there are any questions about the Governance process.

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