Summary :
In order to give Backers an opportunity to exit their positions in Borrower Pools prior to the end of the lock-up period, we propose the creation of a secondary marketplace that enables Backers to sell their Borrower Pool positions.
Motivation :
The lock-up period for Backers who lend to Borrow Pools is 2-3+ years. This long-term capital commitment is reducing the number of people who are willing to contribute to Borrower Pools.
Meanwhile, Borrower Pools are arguably the most important component of the Goldfinch protocol’s capital stack. If no one is contributing to Borrower Pools and supplying first-loss capital, then there can be no functioning Senior Pool.
Furthermore, since the Backer positions in Borrower Pools are represented as NFTs, there are many existing platforms that could facilitate a secondary marketplace for these Backer positions.
Specification & Requirements :
Create a Secondary Marketplace for Backer positions
Leverage an existing solution so we can deliver this benefit to the community ASAP
Use immutable smart contracts and on-chain or open source solutions wherever possible, thereby preserving decentralization and limiting future maintenance needs
Warbler Labs team should be responsible for standing up the Secondary Marketplace and supporting it for a 3 month period, after which the Community should take on any limited maintenance responsibilities
Benefits :
Backers will be able to exit their Borrower Pools positions if they need liquidity before the capital lock-up ends
More Backers will be willing to contribute to Borrower Pools
Drawbacks and Risks :
None
Voting :
YES vote means you support the creation of a Secondary Marketplace for Borrower Pool positions
NO vote means you do not support the creation of a Secondary Marketplace for Borrower Pool positions
Do you anticipate that this secondary pool offers lower returns/higher penalty rates? What’s the cost of doing this (opportunity vs risk, not dollar amount)? Any type of market data available to illustrate the need for the proposal?
It would be great if you could elaborate on the necessary functionality of such a market, so that the community can form a better understanding of what existing solutions could be fitting, or what it would take to do the maintenance after the initial 3 months of upkeep by Warbler, as proposed.
Since the backer positions are NFTs, it strikes me that we’re looking for an OTC-esque NFT market. I know that Sudoswap recently launched, which could be an interesting solution.
Thank you, Manish, for this proposal, and to other community members for the comments! To briefly intro myself in this forum - I’m Jake, Head of Product for Warbler Labs, responding on behalf of the Warbler Labs team.
Warbler Labs believes in the importance of building a decentralized solution to provide Backers with an option to exit their positions. We agree that it will help solve the problem Manish highlighted:
(1) Giving Backer’s a way to exit their Borrower Pool positions if they want to do so before the end of the lock up
(2) Making Borrower Pools more attractive for new Backers, who may be considering participating in the Goldfinch ecosystem
We propose to move this to a Snapshot vote so that we can understand the Community’s support for the proposal overall. This will allow the Warbler Labs team to conduct further research and build a long term solution that best aligns to the proposal’s Specifications and Requirements.
To respond to questions / comments that have come in:
We agree it makes sense to have a low % fee for selling positions in the Backer Secondary Marketplace, which would be paid to the Goldfinch treasury. This is similar to how withdraw fees function on the protocol today.
In addition to this proposal, the Warbler Labs team has heard from investors & LPs that a secondary marketplace for Backer positions was of interest. This was one of the proposed goals in GIP-06 Proposed Goldfinch Roadmap to address such feedback. This additional proposal from the community gives us further confidence in building a solution for the community.
We believe the high level requirements of the proposal are well stated:
Secondary Marketplace should facilitate the listing, buying, and selling of Backer NFTs
Secondary Marketplace should optimize for decentralization and be built in a way that does not require continuous upkeep (e.g. leveraging immutable smart contracts)
In addition to building the Secondary Marketplace, Warbler Labs is committed to an initial technical support period (approx. 3 months) to ensure the Secondary Marketplace is functioning as intended
After this initial support period, Warbler Labs will hand off the Secondary Marketplace to the community, which would be responsible for further changes or improvements
If this proposal passes, our team will explore Sudoswap in addition to other potential options
I’m Max, one of the co-founders over at FIAT DAO. We launched with the express purpose of unlocking liquidity for fixed term lending positions (FIAT = Fixed Income Asset Token ) and I think our community would be keen on collaborating with Goldfinch on this problem space.
At the moment, FIAT accomplishes this via a collateralized debt position system akin to Maker or Reflexer’s. Users are able to mint the $FIAT stablecoin against fixed term positions in Element, Notional, and Yield. We consider this to be an MVP as more sophisticated solutions (peer-to-pool lending, order books, margining) require a certain degree of critical mass to work.
We’re currently underway with protocol development that will allow us to take on collateral types that may be less liquid or which bear true credit default risk - i.e. those in question here. It’d be constructive to collaborate with Warbler Labs on integrating borrower pool positions as collateral as well as sharing our lessons from tackling this issue over the past year.
Excited to see that Snapshot moved forward unanimously!
) and I think our community would be keen on collaborating with Goldfinch on this problem space.