MIP10c3-SP#: 18 Author(s): Niklas Kunkel (@NiklasKunkel) Contributors: Type: Process Component Oracle Team Name: Green Status: RFC Date Proposed: 2020-11-27 Date Ratified: <yyyy-mm-dd>
This Collateral Onboarding Oracle Assessment has been prepared in reference to Maker Governance ratifying:
MIP13c3-SP4 - Declaration of Intent - Offchain Asset Backed Lender to onboard Real World Assets as Collateral
MIP21 Real World Assets - Offchain Asset Backed Lender
Oracle Data Model
Oracle Supporting Data Model(s)
The unique structure proposed in MIP21 only utilizes certain components of the Maker Protocol while others are vestigial. Liquidations are not conducted through the Maker Protocol’s liquidation mechanism but instead conducted off-chain through a trust. The trust is legally bound with a set of conditions for liquidation, one of which is a signal from Maker Governance to liquidate. Hence from a liquidations perspective, there is no need for an Oracle updated by Feeds to broadcast the price of RWA-001. Instead, liquidation require an Oracle containing a boolean toggle controlled by Maker Governance.
Typically in the Maker Protocol, the price an Oracle exhibits in combination with the collateralization ratio is used to determine the maximum amount of Dai that can be generated against a specific collateral. RWA-001 is handled differently as the value of the tokenized representation of equity and the credit line extended to that equity is ratified by Maker Governance before the collateral is onboarded into the Maker Protocol. Hence from a Dai generation perspective, there is no need for an Oracle broadcasting the price of RWA-001.
As we have shown the price of RWA-001 tokenized representation of equity is not utilized in the Maker Protocol in any fashion, neither in liquidations nor in determining the amount of Dai that can be generated. Instead, the role of an Oracle for RWA-001 as described in the current implementation of MIP21 is exclusively as a liquidation signaling mechanism for Maker Governance.
Due to the complexity of integrating a real world asset into the Maker Protocol, the Oracle Domain Team believes the configuration of legal and technical structures described in MIP21 are a good baseline to build on. That said, The Oracle Domain Team highly urges the MakerDAO community to iterate on the processes described in MIP21 and governing RWA-001 and future real world assets, such that more guaranteed are ensured cryptographically by the Maker Protocol rather than complex legal arrangements. One such area might be the periodic assessment of the value of the underlying equity by a neutral third party such that the MakerDAO community has a clear view of the present-value to inform their prerogative to liquidate.