In order to allow more people and entities to participate as Liquidity Providers and Backers in Goldfinch, we propose enabling two new UID types: US entity, and non-US entity. This proposal would:
a) Allow both new UID types to participate in the Senior Pool
b) On a case-by-case basis, allow Borrowers to choose which of these UID types to enable in their specific pools.
This will not impact any existing participants, UIDs, or capital already deployed through Goldfinch.
Until now, the UID service created by Warbler Labs has only supported individuals. Warbler has recently expanded UID to support entities, and Goldfinch should take advantage of this. There is large demand from entities to supply capital to the protocol — both as LPs and as Backers — and yet currently they won’t be able to do so, even after Warbler enables support. Enabling entities to participate will support significantly more growth in capital for the protocol.
Based on conversations with potential borrowers to understand their different regulatory obligations, we believe borrowers will be comfortable with these new types of participants supplying capital to the protocol. In addition, for individual pools, borrowers can also specify a particular subset of these UIDs if they need.
We therefore propose that the Senior Pool expand the list of UIDs that can supply capital to include these new UID types.
Note: Regarding voting, while it isn’t critical right now, eventually we will probably want to consider how voting interacts with entity ID’s. Since entities can be created more easily, it generally hurts the “unique” aspect of UID, and could have an adverse effect the integrity of the quadratic voting system. This should be dealt with separately in a meta governance proposal. I don’t think this needs to be dealt with right now though.
Here is a summary of the UIDs that currently exist and their current access on Goldfinch:
- ID_TYPE = 0, Non-U.S. Individual: Can currently vote and supply capital.
- ID_TYPE = 1, U.S. Accredited Individual: Can currently vote and supply capital → NOTE: U.S. accredited are theoretically already supported in the Senior Pool, but Warbler Labs has not officially rolled out operational support. This is happening very soon. But from the perspective of the protocol, nothing needs to change to support them, and hence we note this as “can supply capital”.
- ID_TYPE = 2, U.S. Non-Accredited Individual: Can currently vote, but not supply capital.
- ID_TYPE = 3, U.S. Entity: N/A
- ID_TYPE = 4, Non-U.S. Entity: N/A
This proposal would enable Type 3 and Type 4 to supply capital on the Senior Pool, and by default it would allow voting (because the current snapshot strategy allows any UID type to vote). From a technical perspective, it only requires a trivial change to this line on the
- Allows non-U.S. entities, U.S. entities, supply capital to the Senior Pool, which should greatly increase the available capital to Goldfinch
- Provides comfort to Borrowers regarding following regulatory rules and requirements
- Adds a very small amount of complexity and gas costs to the protocol.
“Yes” - Permit ID_TYPE 3 and 4 — U.S. and non-U.S. entities, respectively — to supply capital to the Senior Pool.
“No” - Do nothing