Collateral Ruleset: Implementation Details
Last week we introduced our first two collateral rulesets, Residential Construction and Professionally Managed Race-Horses. Our new approach to onboarding collateral allows governance to agree on a set of rules relevant to specific loan types. This enables our lending partners and protocol to be more proactive in driving TVL to Hifi’s protocol on-chain. Today’s blog post will highlight the overall process, define the roles and responsibilities of everyone involved, and link to all the legal agreements being made between each party.
Overview
There are three key roles involved in lending to Real-World Asset (RWA) borrowers, HIFI Token Holders, a governance-appointed Designee, and a Lending Partner. Below is a more comprehensive definition of each role, but the key updates HIFI token holders should understand are that the Designee is responsible for both minting collateral tokens equal to the value of the lending partner’s customer deposits and for enforcing DAO set credit limits.
HIFI Token Holders
HIFI Token Holders primarily have an administrative role. Collectively we are responsible for approving rule sets, system-wide credit limits, a designee, and lending partners. We also manage the configuration of any relevant protocol parameters needed.
Designee
The Designee is a governance-appointed entity, who is legally mandated to act in the best interest of Token holders. They formally represent the Hifi DAO interests, oversee the record-keeping, and manage any necessary audits of our Lending Partners. Importantly, they enforce DAO set credit limits. The designee is responsible for minting collateral tokens that match the value of the lending partner's customer deposits. Lastly, in the case of default and RWA collateral liquidation, the designee works to maximize the value returned to the protocol to pay off outstanding debts.
Lending Partners
The lending partner is responsible for driving demand for protocol-sourced liquidity, administering loans to borrowers, and liquidating assets when appropriate. Lending partners are required to keep accurate records and source independent third-party appraisals for accurately assessing the value of collateral.
Legal Agreements
Updated legal agreements can be found here:
Next Steps
In the coming days, the core team will publish a draft of the next proposal on the governance forum for community discussion before submitting the proposal for a vote a few days later. Thanks for being a part of our awesome community as we all work together towards Hifi’s goal of onboarding $25M of TVL!
