GIP-67: New Proposal for Using GFI to Help With Principal Loss

Proposals
21

Can you clarify what you mean?

Are you saying that you are OK with using treasury GFI for coverage (as it was intended in the initial tokenomics by the way) but only and only if moving forward a % of the fee on interest collected by the treasury as USDC is used to top up such fund?

I don’t see any issue with that, I think that would actually be helpful.

22

@P_T , that sounds like a reasonable thing. It’s already happened to some extent with Tugende. But formalizing it sounds like a separate proposal. This one explicitly says in the title it’s about using GFI. So I agree that having some proposal around formalizing how USDC could be used is good, but don’t think that should block or slow down this proposal. Someone should just write up a separate one to discuss the USDC side of things.

23

At the moment there is no reserve fund that could be used to cover losses. A reserve fund that is specifically designated for such purposes only. To quickly create and fill it, you can use GFI. This will allow you to react relatively quickly to the current situation.
But in the future, I personally would not want all losses incurred to be covered by GFI, even if this is provided for in the initial tokenomics.
Therefore, in the future, this fund can be replenished at the expense of a certain small percentage on loans. This will reduce the expected profitability to some extent, but will provide a more sustainable mechanism for absorbing losses that arise.

24

Fair point. Indeed, this proposal is only about using GFI to cover losses. So in the case of this proposal, I am leaning towards the “YES” option.
And options for further use/non-use of GFI can be specified in subsequent proposals.

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25

Hi guys, even though I feel sorry for the Lend East lenders, I had to vote “No” because of the below two reasons:

  1. I do not want to set a bad precedent that we can sell GFI for any losses being borne by the lenders of any pool. I don’t think GFI is made for that purpose.
  2. Even if we want to take that route, I thought we can wait for another 9 months. Because I see that the last pool to be repaid fully is coming up on April 2025. So, it is just 9 months away for us to know the status of all the pools. So I think we can just wait till then and then put up this proposal (if needed) so that we can clearly know how many pools have defaulted and how many lenders lost their money. If in case no other pool gets defaulted by then, then it becomes very easy for everyone to support Lend East guys as the community as a whole do not want just the Lend East lenders to suffer the losses. In case other pools also get defaulted, then we can again think how to compensate all the lenders equally so that no lender of any pool gets left out. In these 9 months, we might also know how much Goldfinch foundation/Advisor is able to get back from Lend East and what amount is exactly lost and need to be compensated.
26

The approach of @velvetdoctor is quite reasonable. I also want to avoid setting a precedent where GFI is used as a fallback, as repeated usage might occur. It’s crucial for the advisor to be more proactive and aware that there will be no assistance from the Treasury in the event of another default. Ideally, no further defaults should happen, and all borrowers should adhere to their commitments to repay everything.

1 Like