[SolarX] MIP6 Application: Uprets/SolarX: Industrial Real Estate-Backed Loans

We are discussing this with UPRETS and the MakerDao team. One option is to convert DAI to USDC to USD.


sure… but who has custody of the DAI or USDC? how does it get to the seller?

1 Like

Thanks for the clarification. That’s not easy to do with a project of this scale. I’m sure it wasn’t easy to avoid needing some kind of federal permit or utilizing federal resources!

1 Like

More than likely you’ll need to setup a Trust that will be acting on behalf of Maker. You could use a Broker (Coinbase, Gemini, etc., or even Avanti Bank & Trust) to swap DAI to USD, IMO.

we are in discussions with UPRETS, Maker and our counsel about full structure for the transaction as we speak. We will share complete details as soon as we can.

1 Like

Thanks for the suggestion. We have 3 possible structures under consideration at the moment, including a Trust.

1 Like

An update here.

We have been working significantly with @Daviddai , @UPRETS_Real_Estate @Andy.SolarX, and others to find the best legal structure for this project (and likely for a lot of MakerDAO RWA collaterals going forward). So far we are settling on a Cayman STAR Trust and a Delaware LLC (thanks @christiancdpetersen for the work on this), but this will have to be worked on by law firms (something we should be able to achieve in June).

As known since the beginning, the first closing date is expected for the end of June/July (the financing itself will take more time but they need a guarantee to start the process). Per the community comments on the RWA Strateg, the RWF CU is ready to push this project forward to do whatever it takes to achieve this goal and close the deal (assuming everything is fine to our standards and timely on the other side).

It’s an ESG project, but the first project will cost $25M of which $20M is expected from MakerDAO (Loan to cost 75%, SF around 5.5%). This is no small amount for a single loan. It remains quite small compared to MakerDAO balance sheet (<0.5%) but this can be one point where people can be uncomfortable. The project will have a 20-year purchase agreement with PSEG ($50B in total assets), Baa1/BBB credit rating, and publicly listed (the MakerDAO credit facility itself would be for 5-7 years). I would say that we are faced mainly with construction risks (and some technological risks).

So I wanted to do sentiment polling. This is obviously not the governance poll (for which we need a proper risk assessment). The outcome is informative only but will let us decide whether we should focus on that and deliver or be respectful of our partners and let them know that we pass and that they should work on another financing plan.

Should we finance the SolarX project?
  • yes
  • no
  • abstain

0 voters

Feel free to comment as well.

1 Like

If you want to make an omelette, you have to break some eggs. I think that the lessons learned will be worth the upside/downside of the investment.

1 Like

Isn’t this an 80% LTC?

Regarding whether we should do this, my opinion is “of course we should!” … BUT the structure needs to be very good for exposure of this size. I am willing to compromise on a lot of things, but proper structuring and recourse is not one of them. That being said, it looks like there’s a lot of work being done to structure this appropriately, so I’m looking forward to seeing this progress.


It’s a good rate for Baa1/BBB — lower than historical, but good for the current rate environment.

My one question is what the plan is if there are unforeseen delays. I don’t know how likely that is — maybe these don’t take much to set up from a construction standpoint — but they expect to be cash flow positive in 6 months. Just curious what their plan is if that takes longer.

In general, this is the kind of deal we should want to be doing, as long as the technical aspects are correct

We are currently assessing the risk profile associated with the construction of a solar farm, including the time required for permitting solar farms in NY and any typical construction risks (equipment delays, weather delays, and the like). We envision that we will provide a response to the community on these types of issues. Similarly, we will assess the typical operational risks associated with power production from a PV solar farm.


By the way, have you considered placing a Delaware Trust above the Delaware LLC? I think this adds a lot of comfort especially for a facility of this size. Also, will this be structured as a loan with a senior lien? Or is it an investment in a security, like in the Centrifuge model?

Yes, we have considered the Delaware trust as part of the overall going forward model for RWA. Happy to discuss the Delaware trust vs Delaware LLC details with you offline. You can DM me and we can schedule a time. And, yes, the loan will be secured by the project assets.

Another strong use case for Dai. Invaluable opportunity to add another pro/con experience against the centrifuge/securitization model. Looking forward to the risk assessment.

I would love to be included in the discussion between Delaware Trust and Delaware LLC!

A couple of comments:

  1. Agreed on this being a good rate for Baa1/BBB: let’s say yield spread over UST10 is 175 bps for BBB. UST10 is 1.6% now…so a comparable Baa1/BBB rate should be 3.35%. Obviously that’s using PSEG’s credit rating
  2. A quick google search turned this up: https://www.utilitydive.com/news/with-solar-sale-pseg-doubles-down-on-offshore-wind-and-nuclear/600181/ Does this mean PSEG is not interested in doing Solar itself, and is instead working with others in the space instead (presumably good), or just generally not interested in Solar (presumably bad)?

That seems more the rate for seasoned debt. What we’re being offered is a good, solid rate, but not that drastic of a spread.

I cannot speak to Roolie’s comment in respect of PSEG’s interest in solar with any specific insight. However, NY is pushing aggressively into renewable energy, including solar.

If I was to guess, I assume that PSEG concluded that other persons could develop and operate solar farms (which are not technically challenging vs offshore wind) and PSEG Long Island will simply buy the power.

Strongly support! It will open another door for MKR and Defi.

Strongly support!

Re: PSEG not interested in doing solar itself:

NY is a deregulated electricity market, which means that all power plants compete equally, whether owned by PSEG or a third-party. From https://callmepower.com/ny/market-liberalization:

To combat Vertical Monopolies, where utilities hold unfair advantage by controlling both the transmission and the generation of energy, COC required local utilities to deliver proposals on how they would cede some of their market power. For a lot of utility companies, this included divesting from energy generation facilities.

Currently LIPA doesn’t own any generation: Long Island Power Authority - Wikipedia

Adding my own observations: Solar PV Plants are a much more fragmented industry than traditional power plants, which required massive investments. Large utilities don’t want to deal with hundreds of permitting processes and construction projects. By signing a PPA with a third-party, they can avoid the messy parts of the process.