---
# System prepended metadata

title: 'MIP105: The Real-World Asset Collateral Scope Framework'

---

# MIP105: The Real-World Asset Collateral Scope Framework

## Preamble

```
MIP#: 105
Title: The Real-World Asset Collateral Scope Framework
Author(s): @rune
Contributors:
Tags: endgame, scope-framework
Type: General
Status: Accepted
Date Proposed: 2023-02-06
Date Ratified: 2023-03-27
Dependencies:
Replaces:
Ratification Poll URL: https://vote.makerdao.com/polling/Qmbndmkr
Forum URL: https://forum.makerdao.com/t/mip105-the-real-world-asset-collateral-scope-framework/19688
```

## Sentence Summary

The Real-World Asset Collateral Scope Framework provides the core principles, rules and regulation regarding Real-World Asset Collateral in the Endgame.

## Paragraph Summary

MIP105 establishes the Real-World Asset Collateral Scope Framework. This includes direct exposure by Maker Core to stablecoins, and, during the pregame, direct exposure to advanced RWA collateral types including offchain and onchain bond products and complex loans. All rules for Real-World Asset Collateral for the DAO are contained in this framework, including the procedures of the Real-
World Asset Collateral Scope Framework Advisory Council.

## Component Summary

**MIP105c1: Preamble**  
Contains the Preamble to the Real-World Asset Collateral Scope Framework.

**MIP105c2: Scope Framework Articles**  
Contains the Scope Framework Articles for the Real-World Asset Collateral Scope Framework.

**MIP105c3: Responsible Facilitators**  
Contains details on the Responsible Facilitators for the Real-World Asset Collateral Scope Framework.

**MIP105c4: Scope Framework Articles Modification Subproposal Process**  
Contains details of how the Real-World Asset Collateral Scope Framework can be amended.

## Motivation

The Real-World Asset Collateral Scope Framework is necessary to define the Scope as per the Maker Constitution.

## Specification

### MIP105c1: Preamble

The Real-World Asset Collateral Scope Framework defines the principles and processes related to the practical implementation of Real-World Asset Collateral allocation including direct exposure by Maker Core to stablecoins, and, during the pregame, direct exposure to advanced RWA collateral types including offchain and onchain bond products and complex loans. The Real-World Asset Collateral Scope Framework is subordinate the Stability and Liquidity Scope and the Physical Resilience Scope.

### MIP105c2: Scope Framework Articles

#### 1: The Real-World Asset Collateral Advisory Council

##### 1.1: The Real-World Asset Collateral Advisory Council definition
The Real-World Asset Collateral Advisory Council is a group of Ecosystem Actors that have been approved by Maker Governance to carry out advisory work related to improving the content of the Real-World Asset Collateral Scope Framework.

##### 1.2: Real-World Asset Collateral Advisory Council membership management
Members of the Advisory Council are directly approved by Maker Governance through a governance poll, and must fulfill specific criteria.
* **1.2.1:** The Real World Asset Facilitators must ensure that potential Advisory Council Members can apply to be approved by Maker Governance, using an open process with clear instructions.
---
* **1.2.2:** Advisory Council Members must be ecosystem actors that are not involved in any business activity that could result in a conflict of interest, either directly or indirectly. They must also have relevant skills for providing professional expert input on the content that the Real-World Asset Collateral Scope is covering.
---
* **1.2.3:** The Real World Asset Facilitators must periodically, when it is relevant, review the Advisory Council Applications, and if they find applications that are suitable, bring them to a vote through an MKR governance poll. Approved Advisory Council Members are added to **10.2.3.1:**.
---
* **1.2.4:** The Real World Asset Facilitators may, if they deem it necessary, hold a vote to remove an Advisory Council Member. If an Advisory Council Member has not done any paid work for the Scope for at least 1 year, then the Real World Asset Facilitators can choose to remove them at will, if they deem it necessary.
---
* **1.2.5:** The current approved Advisory Council Members are contained in **1.2.5.1A**.
  * **1.2.5.1A:**
  
    ¤¤¤

    Current list of Advisory Council Members:
      * N/A

    ¤¤¤

##### 1.3: Real-World Asset Collateral Advisory Council projects and funding
The Advisory Council is paid on a project basis to do specific work that improves all or specific parts of the Scope Framework.
* **1.3.1:** Each Quarter, if they deem it necessary, the Real World Asset Facilitators must solicit proposals and find one or more suitable Advisory Council Members to perform a project that will result in output that can be used to improve the Scope Framework. This work output will be presented to the CVC Subcommittee Meetings as the starting point for the CVC Scope Framework Position Documents. As many CVCs as possible should be supported this way, prioritized by the Real World Asset Facilitators.
---
* **1.3.2:** In case an ambiguous, uncertain or challenging situation arises related to the Scope Framework, the Real World Asset Facilitator may approach one or more Advisory Council Members to perform a reactive project that aims to specify the language of the Scope Framework to take into account the specific situation. The Real World Asset Facilitator can then directly propose the change to the Scope Framework in a weekly governance poll, quickly resolving the challenge.
---
* **1.3.3:** The Advisory Council may not produce work output that is directly compatible with the formatting of the Scope Framework. In this case the Real World Asset Facilitator must either transcribe it themselves, or hire an Ecosystem Actor to perform the transcribtion. This role does not require preapproval by Maker Governance.

* **1.3.4:** The Real World Asset Facilitators may also produce advisory input on the content of the Scope Framework themselves, as long as it is focused on improving process and governance content. They are prohibited from providing unilateral input on expert subject matter content.
---
* **1.3.5:** The Real World Asset Facilitators have a budget available to pay for Advisory Council Projects per quarter. All spending must be limited to only what is deemed necessary and with a high probability of producing clearly measurable value, and this must be transparently be accounted for in a forum post at least a week before any transaction occurs.
  * **1.3.5.1A:**

    ¤¤¤

    The Advisory Council project budget is as follows:

    | Quarterly Budget (DAI) | Method of Distribution | Maximum Limit (DAI) |
    |---|---|---|
    | 0 | Keg - streamed at a linear rate over 3 months | 0 |

    ¤¤¤

#### 2: The Implementation of the Real-World Asset Collateral Scope Framework through Software

The Real World Asset Facilitators must in collaboration with the CVC Subcommittees, periodically review possibilities of integrating DAO toolkit innovation into the processes and content of the Scope Framework.

#### 3: Real-World Asset Arranger management

##### 3.1: Arranger definition
Arrangers are Ecosystem Actors that specialize in sourcing, negotiating, structuring of, and reporting on, Real World Asset collateral types and maintaining and monitoring the underlying legal and operational real world structures used by the Maker Protocol. They must never be able to operate or influence the arranged legal and operational structure’s asset operations after the structures have been built and assets allocated hereto, and may earn a fee based on such Arranger activities. Arrangers cannot be Asset managers and are not allowed to actively manage or operate Real World Asset allocations on behalf of Maker. Arrangers are approved directly by MKR voters, and all RWA collateral exposure must be structured by an approved Arranger.

##### 3.2: Active Arranger management
This section handles the logic of adding and removing Arrangers.
* **3.2.1:** Arrangers are onboarded or offboarded based on a governance poll by MKR voters, that is initiated by the Real World Asset Facilitators if they deem it necessary. The active state of current approved Arrangers is maintained in **3.2.1.2A**.
  * **3.2.2.1:** In case of significant legal, regulatory or popular fear, uncertainty and doubt connected to an approved Arranger, the Real World Asset Facilitators must propose a governance poll to designate the Arranger as deactivated. A deactivated Arranger cannot onboard new structures, and their existing structures must be examined to determine whether it is feasible and affordable to shift their exposure to a different structure. Once the fear, uncertainty and doubt conditions have passed, the Real World Asset Facilitators must again propose a Governance Poll to reactivate the Arranger.
  * **3.2.1.2A:**

    ¤¤¤

    List of current active Arrangers:
      * Monetalis
      * Blocktower

    ¤¤¤

##### 3.3: Arranger standard fees
Arrangers may charge at most 15 basis points per year in fees on top of other fees charged by the structure and the Asset Manager. The fee is applied to the total value deployed in the structure. For stablecoin Arranger services, Arrangers may charge up to 5 basis points. The fee is applied to the total amount of stablecoins that Maker has exposure to, that the arranger is providing Arranger services for.

##### 3.4: Arranger concentration risk management
The Maker Protocol may not have more than 60% exposure of its Real-World Asset collateral to the structures of a single Arranger. In cases where for practical reasons there are not enough Arrangers able to allow Maker Governance to fully deploy its collateral in order to optimize the yield earned, the concentration requirement can be temporarily exceeded. This number must be continuously reduced, and the Real World Asset Facilitators must take action to search and propose onboarding of additional Arrangers when it is economically feasible to do so.

##### 3.5: Arranger attestations and stress tests
Arrangers must publish quarterly reporting on each structure they have arranged, and must alongside the reporting publish stress test analysis that shows how the structures would perform based on historical financial crisis scenarios and other example scenarios. The Real World Asset Facilitators must periodically fund independent Ecosystem Actors to review and verify the quality and the results of the stress tests. Should an independent review produce an unfavorable result, the Responsible Facilitators must propose a governance poll for warning, temporarily deactivating, or permanently offboarding the Arranger and/or the Asset Managers connected to the discovered issue.

##### 3.6: Arranger external legal counsel fee support
The Real World Asset Facilitators have a budget available to pay legal costs related to legal research and first time setup of legal structures for arrangers. Arrangers that are supported this way must publish all research and conclusions related to the structure, to help other arrangers replicate the work and strengthen the Maker Arranger ecosystem.
* **3.6.1:** The Arranger external legal counsel fee support budget is described in *3.6.1.1A*.
  * **3.6.1.1A:**
    ¤¤¤
    The Arranger external legal counsel fee support budget is:
    Up to 1,000,000 DAI available per year. 
The full amount is immediately available at the start of the calendar year, and parts of it can be paid out through executive vote bundling when requested by the Real World Asset Facilitators.
¤¤¤

#### 4: Asset Managers

##### 4.1: Asset Manager Definition
Asset Managers are Ecosystem Actors that actively manage and deploy capital allocated by the Maker Protocol into a trust structured by an Arranger. Asset Managers are chosen by Arrangers, who must present the Asset Managers alongside the other details of new RWA deployment opportunities that they propose to Maker Governance.

##### 4.2: Asset Manager current information
Asset Managers are not directly onboarded by Maker Governance, but are instead indirectly onboarded if they participate as Asset Managers in an arranged structure proposed by an approved Arranger and approved by Maker Governance. High quality, detailed, current and transparent information must be made available about all Asset Managers directly in the Real-World Collateral Scope Framework.
* **4.2.1:** The list of active Asset Managers is maintained in **4.2.1.2A**.
* **4.2.1.1:** In case of significant legal, regulatory or popular fear, uncertainty and doubt connected to an Asset Manager, the Real World Asset Facilitators must propose a governance poll to designate the Asset Manager as deactivated. A deactivated Asset Manager cannot be involved in new structures, and their involvement in existing structures must be examined to determine whether it is feasible and affordable to replace them. Once the fear, uncertainty and doubt conditions have passed, the Real World Asset Facilitators must again propose a Governance Poll to reactivate the Asset Manager.
  * **4.2.1.2A:**

    ¤¤¤
    
    List of active Asset Managers:
      * Blackrock
    
    ¤¤¤

##### 4.3: Arranger and Asset Manager negotiations
Arrangers must negotiate RWA deployment opportunities with Asset Managers, and when the terms of a deal is fully negotiated, bring the deal to Maker Governance to consider. Arrangers must not have any conflict of interest with Asset Managers, and must always strive to deliver the best possible terms, with an emphasis on maximizing the yield earned by the Maker Protocol after all fees and other costs, while ensuring legal structure and financial risk is minimal.

#### 5: Implementation of Real World Asset Stability Collateral

##### 5.1: Definitions
This Article covers how the collateral allocation rules for Stability Collateral defined in *Stability and Liquidity 3.2* is practically implemented with Real World Asset constructs.

##### 5.2: Implementation of Real World Asset Stability Collateral
This section the Active Elements that define specific Stability Collateral and its risk parameters.
* **5.2.1:** *Cash Stablecoin Implementation*. The Maker must target an exposure to Cash Stablecoins equivalent to 10% of the total Effective Circulating Dai supply. The breakdown of approved Cash Stablecoins and their individual parameters is described in *5.2.1.1A*. The Real World Asset Collateral Facilitators can propose a governance poll to change the approved Cash Stablecoins and their targets if they deem it necessary.
  * **5.2.1.1:**

    ¤¤¤

    Active Cash Stablecoins and their parameters:

    | Cash Stablecoin | Effective Allocation | Stability Fee |
    |---|---|---|
    | GUNI-DAI/USDC 0.01% | 100 million Effective Allocation (As GUNI-DAI/USDC 0.01% contains 50% Dai this is implemented as up to a 200 million Debt Ceiling, but the Effective Allocation for the ALM model counts only as 100 million) | 0.06% |
    | USDC PSM | 100% of remaining Cash Stablecoin exposure after allocating to all other Cash Stablecoins | N/A |

    ¤¤¤

---
* **5.2.2:** *Liquid Reserve Implementation*. Maker must allocate all excess Cash Stablecoins to Liquid Reserves through an automated mechanism. The list of approved Liquid Reserve assets and their parameters is described in *5.2.2.1A*. The Real World Asset Facilitators can propose a governance poll to change the approved Liquid Reserve assets and their parameters if they deem it necessary.
   * **5.2.2.1A**

    ¤¤¤

    Active Liquid Reserve assets and their parameters:

    | Liquid Reserve | Effective Allocation |
    |---|---|
    | Coinbase Custody Rewards | 100% of excess Cash Stablecoins |

    ¤¤¤

  * **5.2.2.2:** A smart contract must move any excess Cash Stablecoin exposure into the Liquid Reserves, and must move any available Liquid reserves into Cash Stablecoins if the protocol is below its target Cash Stablecoin allocation described in *5.2.1*.
---
* **5.2.3:** *Incubated Stablecoin Implementation*. Maker may maintain a limited allocation to Incubated Stablecoins chosen by Maker Governance for their long term strategic value, if they meet specific requirements. The breakdown of approved stablecoins and their individual parameters is described in **5.2.3.3A**. The Real World Asset Facilitators can propose a governance poll to change the approved Incubated Stablecoins. The Real World Asset Facilitators can directly modify the listed parameters based on the calculations described in the subclauses to *5.2.3*.
   * **5.2.3.1:** Incubated Stablecoins can receive at most a 200 million Debt Ceiling.
   * **5.2.3.2:** To mitigate reverse concentration risk Maker may at most make up 50% of the total supply of a Secondary Yield Stablecoin. The Real World Asset Facilitators must periodically update the effective Debt Ceiling parameter in **5.2.3.5A** based on this calculation and following the update, bundle modifications to the live parameters in the Maker Protocol to be in line with **5.2.3.3A** in the weekly executive votes. The frequency of these changes are decided by the Real World Asset Facilitators based on the magnitude of change, the risk posed by the change, and other factors such as their current workload and bandwidth of Maker Governance.
  * **5.2.3.3:** To be eligible for any debt ceiling, Incubated Stablecoins must pay a marketing reward, or other type of reward, directly as Dai to the Maker Surplus Buffer or through a legal structure, that results in a net income to Maker equivalent to at least 1.9% per year of the allocation to the Incubated Stablecoin.
  * **5.2.3.4A:**
  
    ¤¤¤

    Approved Incubated Stablecoins and their parameters:

    | Incubated Stablecoin | Debt Ceiling (DAI) | Yield Weight |
    |---|---|---|
    | USDP PSM | 0 | 0% |
    | GUSD PSM | 70 million | 2% |

    ¤¤¤

#### 6: Implementation of Real World Asset Yield Collateral Allocation

##### 6.1: Real World Asset Yield Collateral Definition
Real World Asset Yield Collateral is low risk collateral optimized for yield by a Protector Advisor Ecosystem Actor. It plays the role that Protector SubDAOs will eventually do in Endgame.

##### 6.2: Protector Advisor Management and relative Allocation
Protector Advisors are Ecosystem Actors approved by Maker Governance that each are delegated advisory responsibility for a part of the Real World Asset Yield Collateral. They are tasked with advicing Maker Governance on the optimal way to deploy their delegated allocation. The total allocation of Real World Asset Yield Collateral is evenly split between all active Protector Advisors during the Pregame.
* **6.2.1:** The Real World Asset Facilitators can propose to add or remove Protector Advisors if they deem it necessary, by submitting a Governance Poll. Protector Advisors and their Protector Advisor Relative Allocation (PARE)s of the Protector Real-World Asset Exposure are listed in **6.2.1.1A**. Protector Advisors are identified by their registered Ethereum Address.
   * **6.2.1.1A:**

    ¤¤¤

    List of Protector Advisors and their Protector Advisor Split:

    | Protector Adviser | ETH Address | PARE |
    |---|---|---|
    | Spring | TBD | 50% |
    | Viridian | TBD | 50% |

    ¤¤¤

* **6.2.2:** Protector Advisor teams must monitor the allocation available to them and provide advise about favorable opportunities for allocating Real World Asset Collateral. The Real World Asset Facilitators must review these opportunities and may choose to allocate funding for the technical implementation, or request support from other Facilitators who must reasonably fulfil such requests. When Real World Asset Collateral allocation opportunties are ready to fully implemented, they must first be brought to a Governance Poll in the weekly governance cycle for collateral onboarding, followed by an Executive Vote, at a reasonable pace.

##### 6.3: The ALM breakdown of Protector Advisor collateral allocation
Protector Advisor collateral allocation must follow the following constraints:
* **6.3.1:** *ALM Tier 1.* The Protector Advisor can provide advice on allocations of up to (80% * PARE) - (existing ALM Tier 1 or higher allocation for the Protector Advisor) - (existing ALM Tier 1 or higher Protocol allocation * PARE) of new Yield Collateral of ALM Tier 1 or higher.
---
* **6.3.2:** *ALM Tier 2.* The Protector Advisor can provide advice on allocations of up to (65% * PARE) - (existing ALM Tier 2 or higher allocation for the Protector Advisor) - (existing ALM Tier 2 or higher Protocol allocation * PARE) of new Yield Collateral of ALM Tier 2 or higher.
---
* **6.3.3:** *ALM Tier 3.* The Protector Advisor can provide advice on allocations of up to (50% * PARE) - (existing ALM Tier 3 or higher allocation for the Protector Advisor) - (existing ALM Tier 3 or higher Protocol allocation * PARE) of new Yield Collateral of ALM Tier 3 or higher.
---
* **6.3.3:** *ALM Tier 4.* The Protector Advisor can provide advice on allocations of up to (12.5% * PARE) - (existing ALM Tier 4 or higher allocation for the Protector Advisor) - (existing ALM Tier 4 or higher Protocol allocation * PARE) of new Yield Collateral of ALM Tier 4 or higher.

##### 6.4: Approved types of Protector Advisor Real World Assets
Protector Advisors can only asses and advice on Arranger structures that enable allocation of Dai Collateral to asset types defined in this section.
* **6.4.1:** US Government Treasury Bonds, Notes and Bills.
---
* **6.4.2:** Money Market Instruments defined as investment-grade, highly liquid, short-term debt instruments that can be exchanged for cash within 5 business days. Allowed Money Market instrument types include: term certificates of deposit, interbank loans, money market funds/ETF, commercial paper, Treasury bills, and securities lending and repurchase agreements (“repos”).

##### 6.5: Protector Advisor reports and stress tests
Protector Advisors must publish quarterly reports for their total Protector Advisor allocation, and must alongside the report publish stress test analysis that shows how their total Protector Advisor allocation would perform based on historical financial crisis scenarios and other best practice example scenarios. The Real World Asset Facilitators must periodically fund independent Ecosystem Actors to review and verify the quality and the results of the reports and stress tests. Should an independent review produce an unfavorable result, the Real World Asset Facilitators must propose a governance poll for warning, temporarily inactivating, or permanently offboarding the Protector Advisor and/or the Arrangers and/or Asset Managers connected to the discovered issue.

#### 7: Implementation of Clean Money

##### 7.1: Clean Money Real-World Asset exposure restrictions

As defined by the Maker Constitution, Maker may not have exposure to Real World Assets that directly finance coal use for energy or electricity production. This does not apply to metallurgical coal or other usecases of coal where a lower-carbon substitute is not available.

#### 8: Legacy Real-World Asset Vaults

##### 8.1: Legacy Real-World Asset Vault definition
Legacy Real-World Asset Vaults are RWA vaults that were onboarded prior to the Maker Constitution, and that are not adopted into the RWA Scope Framework by being compatible with the specifications in it. They are not counted in the main rules and processes, except for their influence on the ALM model due to their duration risk, where they are considered a form of Protocol Exposure. They must be offboarded when it is reasonable to do so, considering the yield they provide compared to Yield Collateral of the same ALM Tier, and considering all other relevant economic and reputational factors. This article must be updated to contain the exact conditions and practical steps to execute the offboardings.
* **8.1.1:** In case that important changes must be made to the Legacy RWA structures to ensure they keep functioning correctly before they are offboarded, the Real World Asset Facilitators must propose these changes through a Governance Poll.

#### 9: DAI-llarization: The Future of Currency Adoption

**9.1 DAI-llarization Definition**

Dollarization is a process by which a country adopts a foreign currency, typically the US dollar, as its currency or as an alternative to its own currency. 

DAI-llarization is a process by which a country adopts DAI as its currency or as an alternative to its own currency. In other words, DAI-llarization occurs when a country replaces its domestic currency with DAI, either formally or informally, as a means of conducting transactions. There are different types of DAI-llarizarion, including official or de facto DAI-llarization, in which the use of a foreign currency is widespread, but not necessarily recognized as legal tender by the government. 

**9.2: Advantages of DAI-llarization**

Adopting DAI must help bring unbanked or underbanked individuals into the financial system, fostering financial inclusion and economic growth. DAI-llarizaion reduces the people's reliance on banks. DAI allows individuals and organizations to transact without relying on traditional banking systems, reducing issues related to banking regulations and intermediaries. DAI-llarization must provide new ways for investors to place capital in previously untapped regions, reducing investment risks and encouraging growth.

**9.3: Solving Challenges to DAI-llarization**
* **9.3.1** Obstacles: Adoption of stablecoins like DAI can be hampered by macroeconomic obstacles and uncertainty in different regions around the world.
* **9.3.2** Education: The general public will need to be educated on how stablecoins work and why DAI-llarization could be a valuable option.
* **9.3.3** Integration: DAI will need to be integrated into existing financial systems, and partner organizations will need to be convinced of its value.
* **9.3.4** Building Trust: Users will need to trust DAI, and be assured of its stability, reliability, and security.



### MIP105c3: Real World Asset Facilitators

The Real World Asset Facilitators of the Real-World Asset Collateral Scope Framework are defined in MIP113c2.6.1.2.1A.

### MIP105c4: Scope Framework Articles modification Sub Proposal process

During the pregame the Scope Framework articles can be modified through the Monthly Governance Cycle using a MIP102c2 subproposal.
