GIP-06 Proposed Goldfinch Roadmap

Authors: mikesall & blakewest, co-founders Warbler Labs

Summary: This is a proposal to the community for Goldfinch’s roadmap. It’s a little different from the standard type of proposal because it isn’t just a feature. It’s a whole way of thinking. So we’re using a slightly different format than our standard proposal template.

What we’re really doing here.

When people first hear about Goldfinch, they often don’t realize just how ambitious it is. Or more accurately, how ambitious it could be, if we’re all ready to be.

So let us start by saying something crazy. We think it’s inevitable that all private debt will move on chain. All of it. The whole multi-trillion dollar market of it.

Eventually, for people running companies, it will seem silly to get a loan from a private bank rather than a crypto protocol. Going to a bank will be like bartering your goods with your neighbors instead of using the internet to sell them online.

Even more, the whole market will grow. People who could never access capital before will have an option with crypto. New businesses will flourish in new communities because crypto will reach them when banks couldn’t or wouldn’t.

It’s going to take years. The same way it took years for online stores to become the obvious option — or the only option for many new types of stores. It might be a long path, but we’re convinced it will happen. Eventually, if you run a business, and you need a loan, you’ll use a protocol.

Goldfinch will be that protocol.

In this future world, Goldfinch will organize trillions of dollars of global debt. We’ll build it on a foundation of day-to-day productive activities. Not crypto speculation or financial engineering. Just simple economic growth. And a lot of that growth will only be possible because Goldfinch exists. Because Goldfinch will reach people who could never access capital before.

And for the providers of that capital, it will be an easy choice. Goldfinch will span all global activity, so it will offer an incredibly safe, diversified, reliable yield for stablecoins.

Already, we see the earliest signs of this working. In one year, Goldfinch has grown to $69M in active loans across 19 countries and hundreds of thousands of end borrowers. Yet this is just a tiny drop in the bucket of where we’re really heading.

We have a lot to do — let’s get to work.

How we get there: Goldfinch Roadmap

Every step along the way, we must identify the main constraint to growth and find ways to remove it. We can think of the constraints in terms of the different sides of the Goldfinch marketplace: borrowers, backers, and LPs. Right now, the recent new pools show ample demand from high quality borrowers. But backers and LPs are still a constraint. We can solve this constraint in three core ways —

  • Engine: The core functionality of the protocol. There are a number of core functional elements of the protocol that we still need to build in order to enable massive scale. We need to finish building this engine.
  • Access: The ability and ease for people to use the protocol. Even with an engine built, there are limits to who might be able to access it. We need to make it incredibly easy for anyone in the world to use Goldfinch — from individuals all the way to major institutions.
  • Community: The group of people building the protocol’s engine and access. None of this is possible without an amazing community to make it happen. We need to foster the community of people who will build this engine and improve people’s access to it.

We propose efforts across all three of these core areas, both for the immediate term (6 months) and mid term (6-12 months). We leave longer term efforts (12+ months) for future discussions after we learn from these efforts.

1. Engine

Immediate term (next 6 months):

  • Automated leverage ratio — As the whitepaper describes, we need an automated leverage ratio, where the protocol uses an automatic algorithm to calculate how much capital the senior pool allocates to each borrower pool, based on the number of backers in those pools.
  • Staking as coverage — We should implement a staking mechanism where people can stake the GFI token to provide coverage against defaults. In return, the protocol could use the reserves in some form to compensate people for providing this coverage.
  • Lock-up for voting power —We should implement a system where people can lock up their GFI in order to increase their voting power in governance decisions. This would ensure the most long-term-oriented community members have the most impact on decisions.

Mid term (6-12months)

  • Auditor System — As the whitepaper describes, we need an Auditor system, where auditors approve new borrowers and ensure there is no collusion between the borrowers and backers.
  • Origination fees — As the whitepaper describes, we should implement origination fees where people who set up new loans on the protocol receive a fee as the borrower pays back the loan.

2. Access

Immediate term (next 6 months)

  • Lead backer pools — We should create a way for active backers to set up pools where they can raise money from other people and then deploy that money as backers into different borrower pools. This would make it easy for less active backers to participate in junior tranches without needing to evaluate every pool, while enabling “lead backers” to earn additional yield by being a great backer on behalf of other people.
  • Frontend refresh — We should improve the frontend app so that’s it’s easier for new people to understand how Goldfinch works and how they can participate. We should also make the app load faster.
  • Localized borrower support — We should improve the process for new borrowers and provide geo-specific advice to help them to get onboarded to Goldfinch, including the legal documents, entity structures, and crypto on/off ramps they use.

Mid term (6-12 months)

  • Backer secondary markets — We should implement ways for backers to sell their positions in borrower pools to other backers, in order to enable more liquidity for backer positions which otherwise have long lock-ups.
  • Scaling solution — We should implement a scaling solution such as an L2 so that we can reduce gas fees and make Goldfinch economical for smaller transactions.
  • Backer reputation system — We should create a way for backers to build up their public reputation as being great backers. This can help create a valuable signal for new participants, to see what the great backers are doing, while also making it easier for backers to establish themselves in the community and set up the “lead backer pools” mentioned above.
  • Frontend localization — The protocol should be localized to languages in every geography, to reflect the fact that Goldfinch is a global protocol with a global community.

3. Community

Immediate term (next 6 months)

  • Community grants program — We should set up a community grants program to encourage community contributions to the protocol and growth. This should be a broad program that covers all types of contributions.
  • DeFi integrations — We should find ways for the Goldfinch protocol to integrate more deeply with the rest of the DeFi ecosystem. Goldfinch is a composable building block and we should integrate with other DeFi building blocks.

Mid term (6-12 months)

  • Enhanced governance system — We should improve Goldfinch’s governance by building up strong delegates, enabling vote locking (mentioned above), potentially implementing governance mining, and eventually removing the council.
  • Referral program — We should set up an automated on-chain system to compensate people or protocols for bringing new participants to Goldfinch.
  • Localized community groups — We should set up localized groups that are incentivized to grow the protocol in their local geographic region.
  • Community frontends — We should build out tooling, libraries, and incentives to encourage community members to provide new frontends or other ways for accessing the Goldfinch ecosystem.

Final thoughts

We’re excited to see what the community thinks of this roadmap. Hopefully this will show the massive potential Goldfinch has and lays out a clear path for us to get there. We welcome discussion, thoughts, and ideas. Then, when we’ve incorporated everyone’s input, let’s put it to a vote, so we can agree as a community on the roadmap we will build towards, together.

3 Likes

Thanks Mike, Blake and team for providing roadmap. It is really great and amazing to
see how big you are thinking.

I’ve few thoughts -

  1. L2:- Looking at some of the current backers - there is definitely demand from small backers(like myself :)). Gas costs can add up significantly on mainnet for being a backer. What is the plan for L2 deployment and in what chains is it planned ? Would be great to get some feedback on that.

  2. USDC:- Eventually is there a plan to accept beyond USDC ? some might prefer to
    park DAI instead of USDC because of decentralized nature and borrower pools
    taking 3 yrs to be fully repaid back. What are your thoughts on this.

  3. Borrower creditworthiness:- One of the biggest hurdle I see (for backers especially) is screening the borrowers for fraud and creditworthiness. This is what is keeping many folks away. Analyzing for fraud/creditworthiness is no easy task as you know. It takes lot of experience, time and effort and many backers do
    not have the skill to evaluate the borrower profiles. I see eventually more
    and more backers being institutions compared to individuals (now). Until we
    start seeing that - one idea I was thinking is fund(from treasury?) independent financial analyst(s) to put together a report with some sort of rating (on a scale of 1 to 10) for fraud/creditworthiness. This should ease some of this process and provide more confidence.
    Also clear and very detailed documentation on what sort of checks/balances the protocol has with borrowers along with some example situations and how they can be resolved. This is one of the very common question that get asked constantly. Anything we can do to frontload this activity should accelerate the growth significantly.

Overall love how you guys are thinking !!

7 Likes

Hi! Great idea about voting token blocking and stacking options, for really long term and dedicated Goldfinch users. Also very happy about the possible transition to L2.
As for wishes, I would like to add that it would be nice to periodically launch tasks for the community (such as recording video in youtube with the theme of why we choose and use Goldfinch and why it is a promising project, and other activities) to promote the project to the masses. Please don’t forget to do some activities for the community, using hashtags and other things, to broaden the people who know about Goldfinch. :slightly_smiling_face:

It would be great if there is additional reporting that goes along with the implementation of the ALR (i.e. some sort of monthly report for FIDU holders summarizing the beginning and ending period allocations of the senior pool, and any changes in between).

At the risk of being nit-picky… the language here regarding the Auditor system does not seem to be in-line with what the docs say. My understanding per the docs is that Auditors validate that the borrower is a legitimate entity, rather than verifying whether there is collusion or not. Also have additional thoughts specific to the Auditor incentive system (i.e. the way the incentive system is set up, I suspect there will be a gravitation of the results towards a default “Yes” most of the time).
Also, the doc says that Auditors do not attest to credit, but perhaps either Auditors should attest to credit, or there should be a second “Credit Analyst/Review” role.
Lastly, the distribution of rewards should be tied in some way to the lifetime of the deal. If an Auditor votes Yes for a borrower, but that borrower turns out to be a dud (whether due to fraud or poor credit performance), if the Auditor receives their reward up-front, then there is no real incentive to conduct true/proper audits.
Lastly on auditors - there should be some measures to ensure to some degree that these auditors will be independent.

The desired outcome of the approach makes sense, but the approach itself seems a bit convoluted at best, risky at worst. Perhaps instead, having a backer pool managed by GF (rather than a single investor of backer tranches) that operates as a backer version of FIDU would have a similar outcome. Alternatively, a lending pool on the Goldfinch platform that allows backers to post their backer NFTs as collateral for loans up to 80% of the face of that at a cost of 50% of the economics (i.e. the DeFi equivalent of repo financing). Personally, I think the simplest approach would be best (i.e. the backer equivalent of FIDU… BIDU perhaps?).
This would provide a similar result (i.e. better scalability at the backer level, a more diversified offering for smaller and/or more casual/lighter touch backer investors), but without some of the potential loopholes/systemic risks (i.e. backers who see credit impairment on a specific backer tranche might launch a backer pool to offload that risk, or a borrower could launch a backer pool and collude with other borrowers also launching backer pools).

If GF were to set up a backer version of FIDU, an easy place to start would be to start that “BIDU” pool by repurchasing backer tranches from existing backer NFT holders. There are other ways to mitigate the long lock-ups as well (other than a secondary market).

This definitely sounds interesting. It would be really exciting to see the FIDU pool (and possibly BIDU?) extended and made available to other platforms (especially on other chains like Avalanche, Algorand).

If I had to add any additional milestones, they would probably be more along the lines of standardizations and templates.

As for all the other topics/milestones that I didn’t directly reference, I think they are great, achievable milestones to target and definitely beneficial to the overall growth of the platform and of RWA in DeFi.

Hey @nisa , yeah great questions…

  1. L2’s - Yeah def hear you on this, which is why it’s in the Access section. This is a pretty complicated decision in my opinion. Should we split liquidity across multiple chains? Should we try to unify them in some way? Which chain or L2 should we choose? Regardless of what we do, it would likely be a sizable eng lift, and Goldfinch has unique needs here, because the Borrowers need great fiat on and off ramps, and even the bridges to these L2s often don’t have enough liquidity to support $10 or $20M loans. zk-based L2s don’t have that problem, but aren’t as mature as the optimistic ones. Moving to a non-EVM compatible chain would be an even greater eng lift. Also, the L2 landscape is still very young, and it’s unclear who the “winners” will be. This is part of why we put it in the 6-12mo section. I think L2s will mature a lot and we’ll learn a lot even in the next 6 months that will help the community make a great decision. But it’s def something I’d be in support of, as Goldfinch should be expanding access as widely as possible. It also opens up really cool design space to support smaller dollar loans.

2.) This is an interesting one. Kinda depends how we do it. It would be trivial to “accept” DAI and just convert it into USDC on demand. Would that meet the need? Or are you thinking of something else, where the loan itself is denominated in DAI?

3.) I really like this idea, and think it could be a cool community project.

2 Likes

Hi! First of all, thank u for preparing a roadmap.

My first question will be about borrowers. In short I’m just wondering when any borrower could apply for funding in the Goldfinch Protocol. As I understand, atm only a very limited number of borrowers, directly in touch with the team, can create Borrower Pools. That is why I would be interested in looking into a step-by-step guide for any company to become a borrower.

The second question will be about marketing. Since the GF protocol works with companies from all over the world, aren’t u going to translate the GF website and dapp into other languages? Since u focus on emerging markets English is unlikely to be very useful to be frank.

This is a very interesting idea which correlates with the vote on “GIP-04: Expand Eligible Voting GFI”.
An interesting question arises regarding the implementation of this idea: those who already have locked GFIs from Flight Academy will not only be able to vote with the number of locked tokens they have, but their locked tokens for two years will have even more weight than they have now? That is, if I understand correctly, it is possible to make a system where the weight of tokens depends not only on the fact that they are locked, but also on the time of lock…

This proposal is up for snapshot vote.
https://snapshot.org/#/goldfinch.eth/proposal/0x6f88febdb36f5510c3fe7fd8e07da94f5cad7670f9af54fcb29c60a93d3eac16

You have 72 hrs (3 days) to vote on this proposal.

Snapshot proposal has passed with 100% Yes !!
Next step would be approval from council followed with implementation.

1 Like

Council has approved this proposal.