GIP-68/69/70/71/72: Multi-Proposal Announcing Goldfinch V3

Summary

We are very excited to announce this Goldfinch V3 proposal! This combines multiple new efforts and improvements that push Goldfinch into the first and second phases of GRC-2 Blueprint for Goldfinch, which was voted on by the community in November. These include:

  • Goldfinch V3 smart contracts: A pair of two vastly simpler smart contracts that serve as the first “lego blocks” for future lending businesses to build on the Goldfinch protocol. More detail is provided below about what these contracts do and why we’re so excited about them.
  • The first Goldfinch Grants Program: A new grants program to encourage further development of the Goldfinch protocol — building on the foundation set by the V3 smart contracts — and incentivize teams to build on top of it.
  • The first full-time Goldfinch Foundation employees: Hiring new full-time employees for the Foundation to focus on the adoption and proliferation of the Goldfinch protocol, including Obinna Okwodu as Director of the Foundation.
  • Website revamp: A full revamp of the Goldfinch website to a) better explain the vision and blueprint for Goldfinch and b) provide more support to contributors and developers on how to both contribute to and build on top of the Goldfinch protocol.
  • Budget for grants, marketing, and operations: A new budget of 600K-1M GFI for the Foundation over 2 years to cover a) the new Grants program; b) new marketing for Goldfinch; and c) payroll for the new full-time employee(s).

We are very excited about the V3 smart contracts, and they could be a big proposal on their own. However, we believe that for the protocol to be truly successful, the community needs to pair these new smart contracts with a concerted investment in encouraging and supporting their adoption. The first Goldfinch grants program, first Foundation hire(s), revamped website, and new budget all help to achieve this. This is a mega “multi proposal,” and we recommend voting on each component individually.

Motivation

As described in GRC-2 Blueprint for Goldfinch, the Goldfinch protocol has an exciting future vision to be the “Operating System for Lending.” A major part of this is a set of new smart contracts that act as modular “lego blocks” that make it easy for many teams to build lending businesses.

Since the community voted on this blueprint, Warbler Labs launched one of the first lending businesses to build on Goldfinch with Heron Finance, an SEC-registered investment advisor that allows investors to access passive income from custom private credit portfolios. We believe Heron is not only the first DeFi protocol to register with the SEC, but also the first robadvisor to focus on private credit (irrespective of crypto). Since launching, Heron has already passed 2,000+ members.

In our 4 years contributing to the Goldfinch protocol and building Heron Finance, we have had invaluable learnings at Warbler Labs. One major learning is that when it comes to decentralized finance, less is more. We believe that the most enduring DeFi protocols will be made of super simple, modular building blocks that can be easily composed in different ways. And with lending specifically, we have learned from our experience what the core modular pieces of these building blocks should be.

That is what we are proposing with Goldfinch V3 — we have brought all of these learnings together into two deceivingly simple lego blocks: a “Loan” contract and an “Advisor” contract. They are built to be as simple and extensible as possible, and are both audited. With these two contracts, you could easily tokenize any real-world loan (potentially even other kinds of deals too) and build almost any kind of lending business with those loans. We have already battle tested these smart contracts with Heron for several months.

In addition, we want to encourage and help as many teams as possible to build on Goldfinch and use these new V3 smart contracts. To do that, we need to do much more than simply release them into the wild. We therefore propose four additional efforts to support Goldfinch’s adoption: a new Grants program, new full-time hire(s) for the Goldfinch Foundation, a revamped website, and a new budget to achieve all of the above.

Specification and Requirements

Part 1, GIP-68: New Goldfinch V3 Smart Contracts

Over the past 4 years, we have seen many types of loans on the Goldfinch protocol, and now on Heron. We’ve also seen many instances where unplanned changes need to happen to the loans, or small adjustments need to be made. Before V3, if a new requirement for a loan came up (eg. variable rates), this would require a whole new design and engineering process to figure out how to handle that particular feature and all of its edge cases in a smart contract. Each feature could take months to execute end to end. Then, if something about the loan changed later on (eg. a restructuring, or renegotiation of terms), we had to upgrade the contract to make changes to the onchain accounting so that it matched the offchain agreement. This works, but it is slow, inflexible, and error prone, and makes it hard to support many different lending businesses.

To build a true Operating System for Lending, we need a set of new contracts that act more as “lego blocks” that many different teams can use for many different purposes. We have consolidated all of our learnings into two very simple initial Goldfinch V3 smart contracts: a “Loan” contract and an “Advisor” contract.

The Loan Contract:

  • Description: The purpose of the Loan contract is to change the paradigm from V2 so that the amount you expect to pay is fully decoupled from the accounting and calculation logic of how you arrived at that expectation. More concretely, accounting logic lives outside the loan contract itself, such that whether that accounting is on or offchain is just an implementation detail. Instead, we simply store a schedule of expected payments onchain.
  • Source Code: on Base here with verified contract source code
  • Audit: Full audit is here

The Advisor Contract:

  • Description: The purpose of the Advisor contract is to allow for managers to easily manage the positions of many individuals. More specifically, it lets a manager move any position around and redeem / deposit / track such positions for an unlimited number of individual investors.
  • Source Code: Proxy on Base here with verified source code, and implementation here with verified source code
  • Audit: Full audits are here and here

Together, these two V3 smart contracts provide substantial benefits over the current Goldfinch V2:

  • Flexibility - The Loan contract will enable Goldfinch to support literally any type of loan repayment schedule that can be imagined. And it turns out that loans are very heterogeneous. Some are fixed rate, variable rate, or amortized. Some are determined ahead of time, and some need to wait until after the fact. The Loan paradigm enables the seamless handling of any errors, restructuring, penalties or renegotiations that might arise. If we want Goldfinch to be a protocol that supports all lending activity, it has to be flexible enough to handle any situation that could arise.
  • Security - An interesting aspect of the Loan contract is that because we are removing the calculation from the smart contract, supporting all this flexibility makes the contract less complex, not more. This significantly reduces scope for bugs and improves its security posture.
  • Composability - Together, the Loan and Advisor contracts serve as “lego blocks” that allow you to build any kind of lending business. This is the necessary foundational infrastructure needed to support a broader Operating System for Lending.

Part 2, GIP-69: Goldfinch Grants Program

We propose that the Goldfinch community create a new grants program to encourage developers and other products to use and build on the Goldfinch V3 protocol. The grants program should include:

  • Creation of a program to gather new features or “bounty” requests for improvements and new building blocks to support the Goldfinch protocol vision. This program will include a way to suggest ideas, make proposals to build them, prioritize and develop them, and award any compensation. The program could also incorporate incentive grants for teams that use the V3 smart contracts, the details of which would need to be determined and proposed later.
  • The program will be run by the full-time hire for the Foundation.
  • This proposal is deliberately light on details for how the Grants program will be run. If and when the program is voted on and resourced, the next step will be for the person running the program to make a more detailed proposal to the community for how the program will work, which should then be voted on.

If the full-time hire and budget votes do not pass but this one does, indicating the community wants this but not the other aspects of this multi-proposal, then we can potentially make another standalone proposal to provide resourcing for incentivizing and managing a Grants program.

Part 3, GIP-70: Full-Time Goldfinch Foundation Hires, Including New Foundation Director

For the Goldfinch protocol to succeed, we believe the Goldfinch Foundation needs full-time hires that are fully dedicated to supporting the protocol’s success. This will allow the protocol to become even more decentralized and encourage more teams to build on top of it.

The responsibilities of the hire(s) include:

  • Run the Grants program, including establishing a detailed process for how to manage it, managing the program itself, and managing the program’s budget.
  • Broadly encourage community contributions, including engaging with potential contributors, evangelizing the Grants program and protocol, and generally being a main point of contact on behalf of the community.
  • Broadly evangelize the Goldfinch protocol, including outreach to potential DeFi teams, creating & refining public-facing protocol materials, and attending events to interact with and encourage potential teams building on Goldfinch. This also includes managing Goldfinch’s external presence including social media and potential sponsorships, partnerships, and marketing opportunities.
  • Manage Goldfinch’s community operations and supporting the Goldfinch community moderators
  • Manage the Foundation’s finances and budget.
  • General administrative and operational needs, including maintaining the Foundation’s vendors and working with the Foundation’s third party service providers, such as legal counsel and accounting firms.

We also propose the first hire be Obinna Okwodu as Director of the Foundation. We believe Obinna is highly qualified for the role and will do an exceptional job of pushing the protocol forward. To summarize his background, Obinna graduated from MIT, worked in investment banking at Morgan Stanley, and later founded a fintech lender. For well over 3 years since early 2021, he has also worked at Warbler Labs helping to build the Goldfinch protocol. He has a unique experience that straddles both traditional finance and crypto, and has demonstrated an ongoing commitment to the Goldfinch vision. Here is his LinkedIn profile.

As part of this proposal, we propose that with Obinna as Director of the Foundation, he manage any hiring and budget around future hires, within the budget provided by GIP-72. We also propose that the Goldfinch Council sign off on compensation details for all hires, including the Director, to ensure they fall within reasonable competitive market rates.

If the separate vote on the budget does not pass but this one does, indicating the community wants this but not the other aspects of this multi-proposal, then we can potentially make another standalone proposal to provide resourcing for a full-time hire(s).

Part 4, GIP-71: Website revamp

The Goldfinch website needs a revamp to better explain the new blueprint, how the Goldfinch V3 smart contracts work, and encourage teams to build on the protocol. This effort will be managed by the full-time hire, and it could also be a great candidate for the new Grants program.

If this proposal passes but the other proposals for a full-time hire and budget don’t pass, Warbler Labs will support a smaller scoped revamp.

Part 5, GIP-72: Budget to support Goldfinch V3 adoption

The community needs resources for the Grants program and new hires, as well as for general marketing and operational efforts to further expand awareness of the protocol. The marketing efforts could include sponsorships, attending conferences, creating new marketing content and materials (including the website revamp), and other potential initiatives.

We believe this requires a budget in the range of 600K to 1M GFI over two years. For whatever budget is determined in the vote, it will cover all components of this multi-proposal with the following breakdown:

  1. 45% of the budget toward the Grants program, for 2 years
  2. 45% of the budget toward full-time hires, for 2 years. Accounting for competitive market rates and the volatility of GFI, if the community votes on 600K GFI this will cover 1-2 hires for two years, and if the community votes for 1M GFI this will cover up to 2-3 hires for two years. (Note: it is possible there could only be one hire, in which case the community would not use the full budget. To be explicit, the community should never compensate someone well above competitive market rates just because there is extra budget.)
  3. 10% of the budget towards marketing expenses, including sponsorships, conferences, and other initiatives.

The vote will include three options: a) 1M GFI, b) 600K GFI, and c) no budget. If none of the three options receive 50%+ of the vote, the community will do a run-off vote of the top two voted options.

Benefits and Downsides

Benefits

The benefits of each specific component are described above. At a high level, this multi-proposal represents a massive step forward into phases 1 and 2 of the Goldfinch blueprint. This proposal provides both a) new “lego blocks” for Goldfinch to serve as the future Operating System for Lending as well as b) the resources necessary to facilitate its adoption.

Downsides

The new Goldfinch V3 smart contracts entail a dramatic simplification of the contracts themselves. This could mean that it does not initially support some investment features that are already directly built into the V2 (including callability, risk tranching, and deposits directly into the contract). That said, these V3 contracts create a strong foundation for later adding these features in a much simpler and more modular way, and these kinds of improvements are great candidates for the Grants program.

This proposal also includes a budget for the community to make this vision a reality. Spending this budget will mean fewer resources for future potential uses.

Voting

All five components of this multi-proposal should be voted on separately:

GIP-68: New Goldfinch V3 Smart Contracts

  • “Yes” - Adopt the Loan and Advisor contracts as the new canonical Goldfinch V3 contracts.
  • “No” - Do nothing.

GIP-69: Goldfinch Grants Program

  • “Yes” - Set up a new Goldfinch Grants Program.
  • “No” - Do nothing.

GIP-70: 1-3 Full-Time Goldfinch Foundation Hires

  • “Yes” - Have the Goldfinch Foundation hire 1-3 full-time employees
  • “No” - Do nothing.

GIP-71: Website revamp

  • “Yes” - Revamp the Goldfinch website
  • “No” - Do nothing.

GIP-72: Budget to support Goldfinch V3 adoption

  • “1M GFI” - Allocate 1,000,000 GFI over 2 years
  • “600K GFI” - Allocate 600,000 GFI over 2 years
  • “0 GFI” - Allocate 0 GFI
3 Likes

I would suggest to vote against this proposal, not because this is bad itself, but because the timing is horrible:

  • we have a model that is still not proven, with a high default and no system in place to properly manage those default
  • a very hostile community at the moment that is not pushing up any of the initiatives

I would suggest to:
a) get GFI-67 in place first
b) get a proper review from the consultant on the performance of the outstanding pool showing that the rest of the outstanding loans are doing well

That’s only and only when we get positive outcomes, showing that the model works, and with the community more united, that we should invest millions of GFI to accelerate.

Right now we have a model that has destroyed a lot of value for its users/investors, it would be irresponsible to do any marketing and scale a model that is not stabilized and destroy even more value

1 Like

GIP-68: New Goldfinch V3 Smart Contracts

  • “Yes” - Adopt the Loan and Advisor contracts as the new canonical Goldfinch V3 contracts.

GIP-69: Goldfinch Grants Program

  • “Yes” - Set up a new Goldfinch Grants Program.

GIP-70: 1-3 Full-Time Goldfinch Foundation Hires

  • “Yes” - Have the Goldfinch Foundation hire 1-3 full-time employees

GIP-71: Website revamp

  • “Yes” - Revamp the Goldfinch website

GIP-72: Budget to support Goldfinch V3 adoption

  • “1M GFI” - Allocate 1,000,000 GFI over 2 years
1 Like

@Herve The community has already voted NO for the two previous proposals intending to address the default, so why should it hold up GIP-68 thru 72? GIP-67 may fail as well and in any case that discussion should be handled in the GIP-67 forum.

Now, for the actual proposal at hand, I am inclined to vote “Yes” for all five of them. As a software developer/architect, I can relate to the development cycle of learn-then-simply/modularize. The “spirit” of a startup is to make smart mistakes and iterate quickly. I do see this proposal as a smart and good faith attempt to implement valuable lessons without fear of deprecating old code when necessary. The other GIPs are reasonable and maybe even proven-to-be-effective approaches to incentivizing and evangelizing v3. Kudos.

Hello!

Head of Grants at Gitcoin here! I was excited to see your proposal for the Grant Program and wanted to drop a reply.

At Gitcoin, we have extensive experience designing, implementing, and managing successful grant programs. We’ve helped many organizations launch grant programs similar to the one you’re proposing, and our expertise can greatly benefit Goldfinch. References of other programs, large and small, can be provided upon request.

I’m personally familiar with Goldfinch and have been following your work for some time now. I’ve been impressed by the recent commitments to supporting community-driven growth and I believe that a well-structured grant program can play a role in achieving this goal.

I support this proposal and would be open to exploring potential opportunities to support your grant program’s success if greenlighted.

Best of luck!

To be more specific:

  • I don’t have any issue with GFI-68 and GFI-71
  • For GFI 69, 70 and 72, we are talking about dumping a very large amount of GFI on the market to scale a product that so far has lost a lot of money for its users. Iterating fast is good, but here we are just going to spend money on marketing to bring more investors to the slaughterhouse. I find it completely irresponsible. We need to learn from past mistakes, have a community that has a positive mindset, and have a system in place when mistakes happen and only then spend millions in marketing to scale.

So as of now it’s a BIG NO, maybe in 3-6 months will be a different story.

To be clear, the focus will be on further developing the protocol (improvements to how it actually works), and getting more teams to use the infrastructure to build new & better lending businesses. The marketing should be around getting contributors and teams to use and improve the protocol. It’s not about bringing more investors to the prior V2 version or scaling it. So this is about achieving exactly what you said we should do, of iterating and improving the system, and getting the collective community to participate more in making it happen.

I disagree.

I think any successful startup needs a working MVP and have happy early adopters that will promote the products organically, rather than spending millions of GFIs to get a new batch of users because the initial users are left unhappy.

Focusing on early believers / core users and get them to promote your product has always been the winning strategy and the most capital efficient marketing strategy. Not chasing new users through infinite incentives while first users are screaming that they got rekt.

In any startup you scale and double down on marketing once and only once you get your current customers are happy with the service, not when you’re in the middle of a crisis.

GIP-68: New Goldfinch V3 Smart Contracts

“Yes” - Adopt the Loan and Advisor contracts as the new canonical Goldfinch V3 contracts.
GIP-69: Goldfinch Grants Program

“Yes” - Set up a new Goldfinch Grants Program.
GIP-70: 1-3 Full-Time Goldfinch Foundation Hires

“Yes” - Have the Goldfinch Foundation hire 1-3 full-time employees
GIP-71: Website revamp

“Yes” - Revamp the Goldfinch website
GIP-72: Budget to support Goldfinch V3 adoption

“1M GFI” - Allocate 1,000,000 GFI over 2 years

Hey @Herve, I think just to clarify, this is about building the MVP, but for a different product. There is the existing Goldfinch pool, which was about getting investors and connecting them with deals and fund managers (I think that’s what you’re referencing?). And then there is the infrastructure product, which is about getting RWA teams in DeFi to build on the underlying infrastructure that powers Goldfinch and Heron right now. That was what the Blueprint outlined last year. This proposal is about helping to realize that more fully. It’s about having Obinna do things like talk to RWA teams to better understand their needs and then use the budget to help the community build that MVP so other teams can really start using it. It could be used also to encourage teams to build on it, but I agree we shouldn’t go out the gates with heavy incentives before there is a solid infrastructure product that people are actually using. Heavy incentives can confuse product market fit otherwise.