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title: MIP72 Summary
tags: [Summaries]

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tags: Summaries
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# MIP72 Summary

**Note: ATTENTION MIP EDITORS component summary and subproposal labels, as well as sub-proposal parameters need to be formatted properly, it's a bit of a mess ATM, components are listed as sub-proposals at present. I did some light touch formatting changes but it needs a full overhaul - PR: https://github.com/makerdao/mips/pull/600, it's hard to write a governance response without issues being addressed, I've highlighted some issues below and attempted to summarize the MIP**

Motivation - create the arranger role - a DAO-empowered role that causes real-world commerce with DAO oversight. It focuses on core implementation, deal contruction and commerce causing.

## 6S as Arranger

If passed MIP72 would authorise 6s capital as an arranger for MakerDAO.

6s Capital Partners LLC (LendCo) will interact with BorrowCo (TBD).

### Lending Scope

Lending scope is listed, this is separated into the following asset categories:
* Resilient
* Renewable/sustainable
* Commercial Real-Estate

### Loan Restrictions

The following restrictions apply to secured loans:

* LendCo must have first priority senior lien on collateral provided by BorrowCo
* If other financial institutions subsequently participate in the loan, LendCo must be at least pari passu with other senior lenders and such rights must be in writing

The following restrictions apply to acquiring or participating in secured loans:

* LendCo must have first priority senior lien on collateral
* LendCo must be pari passu with other senior lenders and these rights must be in writing

The following Primary Collateral is prohibited:

* Primary operations being technology-related unless secured with approved collateral
* Intellectual property

The following collateral is acceptable:

* Equipment
* Fixtures
* Buildings
* Land
* Accounts receivable and other cash flows
* Finished inventory

A Green Suitability Test shall be administered to Renewable/Sustainable/Resilient collateral.

Lending is restricted to the USA and Canada.

### Credit Diversification

For counterparties with assets less than 10 billion USD:
* Up to 500 million USD, no more than 50% of lending capacity shall be allocated to one counterparty
* Above 500 million USD, and less than 1 billion USD, no more than 20% of lending capacity shall be allocated to one counterparty
* Above 1 billion USD, no more than 15% of lending capacity shall be allocated to one counterparty

These targets will not apply to counterparties with assets in excess of 10 billion USD for the first five calendar years.

### Sequence of borrowing
1. BorrowCo approaches LendCo for a loan
2. LendCo reviews loan request
3. LendCo approves or rejects request
4. If approved, LendCo raises/confirms equity
5. Title and/or collateral review is performed, legal work completed
6. BorrowCo and LendCo execute all documents and set closing date
7. LendCo deploys equity to ensure within the equity requirement constraint
8. At closing, LendCo borrows against its credit limit
9. Post-closing, BorrowCo conducts operations or agreed activities with progress checks
10. The loan is terminated by repayment by BorrowCo or foreclosure by LendCo
11. If BorrowCo wishes to divest the asset, LendCo must agree to release the senior lien. BorrowCo then requests a payoff letter from LendCo
12. A closing date is scheduled. BorrowCo raises funds. LendCo receives all remaining principal and interest. LendCo releases senior lien.
13. At this time, LendCo repays its loan to the Trust, trust releases its senior lien, LendCo repays equity investors.

### LendCo Restrictions

- All projects must be asset-backed, stabilized, operating or "shovel ready" pursuant to the scope.
- The term of a loan may not exceed the market standard for such assets or projects.
- All projects must include a blanket senior lien.

### Operative Documents between Trust and LendCo

- Revolving Credit Facility Agreement(s)
- Trust Agreement that governs the Trust
- Security Agreements
- ETH address:
    - 0x7709f0840097170E5cB1F8c890AcB8601d73b35f
    - Token Name: RWA001-A

### Operative Documents between LendCo and BorrowCo

- Renewable/Sustainable/Resilient/Credit Tenant Lease Collateral
    - Loan Agreement
    - Promissory Note
    - Deed of Trust/Mortgage (senior lien)
    - Collateral Assignments
    - Consents
    - Environmental Indeminification Agreement
    - Completion Guarantee
    - Account Control Agreement
    - Equity Pledge Agreement
    - Operating Agreement

### Resolving Credit Facility Agreement

- All transactions must be senior secured
- Financial ratios as measured at the end of each quarter
    - 

## Governance impacts of MIP72:

### MIP72c1.A.1 - Trustee or Investment Advisor Communication (or generic external party communication)

Allows MakerDAO to communicate with the trustee or investment advisor - text states via the weekly cycle but a 2 week feedback period followed by a 2 week frozen period is indicated.

This should also clarify duration of a poll for these sub-proposals - intention to enter weekly cycle suggests 3 days - also states executive vote should follow - why an exec? Not a technical change to the Protocol

### MIP72c2.A.2 - Modification of the Authorized Representative of RWA International Ltd.

Allows MakerDAO to modify the authorized representative of RWA International Ltd.

- 6s Capital brings forward a new candidate to add/remove/replace the existing Authorized Representative
- If a new party, that party must get approved and KYC verified at boht the Cayman (RWA International) and Wilmington Savings Fund Society (WSFS) level.
- The party must be ratified by Maker Governance

An authorized Representative may resign or be sacked by the Directors at any time without MakerDAO consent.

Required components:

* Name
* Experience
* Additional disclosures - e.g. conflicts of interest

2 week feedback period followed by a 2 week frozen period is indicated.

Doesn't specify whether this goes in weekly or monthly cycle.

### MIP72c1.A.3 - Modification of an SEC Registered Investment Advisor (“RIA”) for RWA Senior Lending Trust

Allows for addition/removal/replacement of an SEC Registered Investment Advisor for RWA Senior Lending Trust.

- 6s bring forward a new candidate
- Candidate must get approved and KYC verified with the Trustee
- Candidate must be ratified by affirmative vote of MakerDAO

Required components:

- Name / Address / Website of RIA
- Confirmation of acting in a full advisory role (i.e. a fiduciary capacity)
- SEC Registered
- Most recent ADV filing
- Current Regulatory Status (e.g. Good Standing)
- Years being an RIA
- Current Assets Under Management (AUM)
- Expected custody, trading, and/or advisory fees for services to be rendered
- Proposed investment policy (must include ability to only be modified in the future with the “affirmative vote of MakerDAO”)
- Additional disclosures, specifically including conflicts of interest (control / economics / other) with any aspect or party of this application

2 week feedback period followed by a 2 week frozen period is indicated.

Doesn't specify whether this goes in weekly or monthly cycle.

### MIP72c.A.4 - Modification of an Observer at 6s Capital

To add/remove/replace an Observer at 6s capital

- MakerDAO brings forth a new candidate via affirmative vote of MakerDAO
- If a new party, must be approved by 6s
- The candidate must have a confidentiality agreement with 6s Capital

An Observer may resign or be removed by 6s Capital for any reason. This relates to when a MakerDAO Observer is desired.

Required components:

- Name
- Experience
- Additional disclosures, specifically including conflicts of interest (control / economics / other) with any aspect or party of this application
- Confidentiality agreement in place

2 week feedback period followed by a 2 week frozen period is indicated.

Doesn't specify whether this goes in weekly or monthly cycle.

### MIP72c.A.5 - Modification of the Trust Distribution Return Actor for RWA Senior Lending Trust

To add/remove/replace the Trust Distribution Return Actor for RWA Senior Lending Trust

- 6s Capital brings forth a new candidate
- If a new party, must get approved and KYC verified at Cayman and WSFS levels
- Party must be ratified by Maker Governance
- Trust Agreement for RWA Senior Lending Trust will be amdended and restarted with a redacted conformed version being posted in a public domain.

The Trust Distribution Return Actor may resign at any time without Maker consent.

Required components when seeking the ratification of MakerDAO:

- Name
- Experience
- Additional disclosures, specifically including conflicts of interest (control / economics / other) with any aspect or party of this application

2 week feedback period followed by a 2 week frozen period is indicated.

Doesn't specify whether this goes in weekly or monthly cycle.

### MIP72c.A.6 - Modification of an Arranger Authorization for 6s Capital

To add/remove/replace an Arranger Authorization for 6s Capital

- Anyone may bring forward an authorization for consideration. This may add/modify/remove an authorization.
- It requires an affirmate vote by Maker Governance

4 week feedback period followed by a 2 week frozen period is indicated.

Doesn't specify whether this goes in weekly or monthly cycle.

### MIP72c.A.7: RWA International Ltd. Advisory Committee

This creates a MakerDAO-approved RWA International advisory committee and the ability to add/remove/replace individuals/legal entities from this committee. Participants shall not be an operational part of RWA International.

The advisory committee is to provide waiver and liquidation recommendations to the directions of RWA International related to credit agreements the RWA Senior Lending Trust may enter with 6s. This committee is not for general operations or approving transactions.

Committee Participants may only serve for a maximum of 24 months. After this, they must re-apply. Participants may only serve two contiguous terms.

The Committee will not exceed 3 members. There is no quorum for Committee recommendations.

Process to add/remove/replace a Committee Participant:
- Public application with the required components below
- Committee Participants must sign a confidentiality agreement with 6s prior to being able to provide a recommendation
- The party must be KYC AML approved by RWA International
- The party must be ratified by Maker Governance

Committee Participants may resign at any time for any reasons without consent of Maker Govenrance.

Required components:
- Name/contact details
- Experience
- Additional disclosures

2 week feedback period followed by a 2 week frozen period is indicated.

Doesn't specify whether this goes in weekly or monthly cycle.

### MIP72c.A.8: Modification of an Established Legitimate Party

Process around Established Legitimate Party and ability to add/remove/replace such individuals/legal entities

The initial parties shall be RWA Company LLC & Will Remor.

Process to add/remove/replace:

- 6s Capital brings a new candidate
- Candidate must be approved by Maker Governance

Required components:
- Name
- Experience
- Additional disclosures

2 week feedback period followed by a 2 week frozen period is indicated.

Doesn't specify whether this goes in weekly or monthly cycle.

### MIP72c.A.9 - Modification of the Reporting Agent for 6s Capital

Process around reporting agent and ability to add/remove/replace such individuals/legal entities.

The initial party will be RWA Company LLC.

There is no limit to the number of Reporting Agents.

To add/remove/replace the Reporting Agent for 6s Capital.

- 6s Capital brings forth a new candidate to add/remove/replace the existing Reporting Agent
- Candidate must be ratified by Maker Governance

Reporting Agent may resign at any time without Maker Governance consent.

Required components:
- Name
- Experience
- Additional disclosures

2 week feedback period followed by a 2 week frozen period is indicated.

Doesn't specify whether this goes in weekly or monthly cycle.