---
# System prepended metadata

title: Collateral and Risk

---

---
title: Collateral and Risk
order: 3
hideLanguageSelector: true
keywords: "format, event, events, meetup, meetups, guide, agenda"
description: "How to add new forms of collateral to the Maker Protocol and address the risk associated with adding new collateral."
---

# Collateral and Risk

The purpose of this document is to guide you in the process of enabling a new token as collateral in the Dai Credit System (DCS).

<Callout>
**Who might be interested?**

<List>

- Organizations and individuals that want to propose collateral types to be added to the MakerDAO Dai Credit System

- Risk teams that want to create risk parameters for new collateral in the MakerDAO Governance Process

- Others interested in the MakerDAO governance process

</List>

</Callout>

The document introduces the suggested information a Maker Governance Risk Team will need to calculate collateral risk parameters and create a governance proposal for adding new collateral to the system.

Types of collateral may include:

<List>

- Native crypto coins such as bitcoin or ether

- Security tokens such as company shares or bonds

- Real estate tokens

- Commodity tokens such as gold

- Intellectual property tokens such as patents

- Digital property tokens such as items from gaming or virtual worlds

</List>

Enabling a token to be used as collateral in DCS allows any token owner to lock up tokens in a Collateral Debt Position and generate Dai stablecoins against this position. It also contributes to the scalability of Dai by increasing the amount of available financial backing.

_NOTE: This document contains guidance and checklists that will require approval in an MKR Governance poll. This hasn’t yet happened at the time of writing, so there may be changes to the process described here._

Further, this document shall be considered a living document that is adjusted as more experience is gained in adding collateral to the system, and new knowledge is available. 

For example, currently, how to add Security Tokens to the system isn’t addressed in any detail. The plan is to add this in a later version.

## How to Propose New Collateral

<CTA>

Please see [How to Propose New Collateral](propose-new-collateral.mdx)

</CTA>

<List>

- Risk Parameters

Please see [Risk Parameteres](risk-parameters.mdx)

- Technical requirements

Please see [Technical Requirements](technical-requirements.mdx)

- Financial Requirements

Please see [Financial Requirements](financial-requirements.mdx)

## Application Form

</List>

This form summarizes the information to submit to a risk team to request that it review your material and propose a set of risk parameters to MKR governance. 

All information requested herein, including documents, must be provided via email. 

If the risk team finds that the material is sufficient, all submitted information will be made publicly available along with the related proposed risk parameters in order to permit MKR governance to make a fully informed decision.

This form hasn’t yet been approved by MKR holders as a template for risk teams to use, so be aware that there may be changes to this section.

### Technical Specifications

<List>

-  What is the token contract address?

-  Where can the source code be viewed? Please provide links to the source code for all contracts providing functionality to the token, including, but not limited to, transfers, freezes, whitelists, blacklists, transaction approvals/rejections, authorizations, upgradability, etc.

- Which token standard does your token comply with?

- Does the token have any special mechanics for handling forks? This may include forks in the token app or in the underlying blockchain.

  - If yes, please provide a reference to more information on fork handling.

- My token fits with the following Dai Credit System adapter:

  - GemJoin

  - I will supply my own adapter contract. Input reference below.

- Has the token passed formal verification?

  - If yes:

     - Please describe the specification.

     - Who composed the specification?

     - Please provide a link to the result of the verification.

 - Technical audit

    - Upload audit report created by qualified research personnel.

</List>

### Financial Specifications

#### Overview Questions

<List> 

- Please provide a short summary of your project.

- Please list the founding members.

- What type of crypto asset is it (utility, work, governance, etc)?

- If native crypto asset, which category (utility, work, governance, etc)?

- What is the token’s usage in the project? How is the token utilized?

</List>

#### Issuance - Bearer Assets

<List>

- What was the date of the ICO?

- What was the initial price and valuation?

- How much capital was raised (in USD and crypto terms)?

- What was the token distribution breakdown?

- Are any tokens on a vesting schedule? If so, what is that schedule? Describe any related vestiture limitations.

- What are the circulating and total supply of the token?

- What is the wallet address of the treasury?

- How much of the ICO raise was converted into fiat (described in both terms of that fiat currency and the amount of tokens?

- Were there any pre-ICO seed investors? Who and what were their respective allocations?

</List>

#### Fundamentals

<List>

- Please link to the whitepaper and/or pitch deck related to the token.

- Please link to the most updated roadmap for your project.

- How many employees and contractors does your project have?

- What is the monthly burn rate?

- What is the strategy for treasury management?

</List>

#### Markets

<List>

- Which exchanges is your token listed on?

- Are you aware of any paid market makers for your asset?

- Does your token have custodial support? Where/with whom? Please provide a copy of the custodial agreement if available.

</List>

#### Community

<List>

Please link your email, Telegram, subreddit, Discord, Twitter, Medium.

What is the website of your project?

</List>

### Legal Specifications

<List>

- Who is the token issuer (if any)?

- Do you have legal representation related (1) to the issuance of the token, (2) regulatory requirements regarding the token, or (3) otherwise? If so, whom?

- What is the regulatory status of the token? Please provide relevant documentation (e.g., legal opinions, prospectuses, public disclosures, filing documents, etc.).

- Are there any rights associated with the token that do not follow from its technical implementation or technical ramifications of the system in which the token is used? If so, what are they? How are they enforced? Please provide documentation memorializing these rights.

- In what jurisdiction(s) was the token issued?? Please provide all filings and public documents related to the token’s issuance.

- Was the token issued as part of a regulatory process (e.g., securities offering)? If so, under which law, rule and/or regulation was the token issued? Please provide all documents related to this regulatory issuance process (to the extent not already provided in response to the above).

- Was the token issued as part of the fundraising process for your project? If yes, who are the investors and how much equity do they respectively hold?

- Please describe the corporate and legal structure of the project/system/product in which the token is used.

</List>