Abstract
This proposal aims to extend support to Untangled RWA lending pools on Celo by allocating the CELO-equivalent of $200,000 as a grant from the Celo Community Fund (CCF) for protocol maintenance and the establishment of a legal structure and monitoring dashboard for Real World Assets (RWA) lending on Celo.
Summary
Having successfully deployed the Untangled protocol on the Celo mainnet, we have built a robust pipeline of institutional-grade real-world lending pools to the Celo ecosystem.
All these pools are rigorously vetted and co-invested by an UK-based, FCA-regulated institutional asset manager.
Our primary objective is to offer RWA yield opportunities to the Community Fund and other investors within the ecosystem. As the initial step, we prioritize establishing a solid foundation for launching and maintaining RWA lending pools within the Celo ecosystem.
Areas of focus
We are seeking a $200,000 worth of CELO grant from the Celo Community Fund (CCF) for the following purposes:
- $75,000 will be allocated to a one-year maintenance of the protocol on Celo.
- $50,000 will be designated for setting up a legal structure that will enable the CCF to lend to Untangled pools and similar real-world lending projects.
- $75,000 will be used for setting up a framework for on-chain monitoring of real world lending exposures
| Proposal budget | $200,000 | |||
|---|---|---|---|---|
| Hours per day | 8 | |||
| Hourly rate | $100 | |||
| Tasks | Engineering days | Total costs | ||
| Maintenance | $75,000 | |||
| Cross chain communication | ||||
| Receiver/Sender contract development and deployment | 5 | $4,000 | ||
| Integrate contracts to business logics | 5 | $4,000 | ||
| Cross chain messaging use case (i.e. no token transfer) | 5 | $4,000 | ||
| Cross chain token transfer (mint/burn, lock/burn) use case | 5 | $4,000 | ||
| FE modifications | 5 | $4,000 | ||
| BE and subgraph modifications | 5 | $4,000 | ||
| USDC/cUSD swap (embed Squidrouter) | 5 | $4,000 | ||
| cUSD/Fiat bridge (working with Mento) | 5 | $4,000 | ||
| Audit of cross chain communication code | $15,000 | |||
| Security incidents/improvements of the protocol | 15 | $12,000 | ||
| Bug bounty costs | $16,000 | |||
| Legal | Contribution to legal expenses: | $50,000 | ||
| Legal structure comparisons | $10,000 | |||
| Legal entiry set up | $10,000 | |||
| Independent director fee - first year | $10,000 | |||
| Audit - first year | $10,000 | |||
| Legal opinion on CCF’s enforcement claim | $10,000 | |||
| Reporting asset tracking | $75,000 | |||
| Data stream from originators | ||||
| API build and test for initial data upload | 2 | $1,600 | ||
| API build and test for on data update | 3 | $2,400 | ||
| Implement independent validation flow | 10 | $8,000 | ||
| Credit modelling | ||||
| Borrowing and lending data from subgraphs | 18.75 | $15,000 | ||
| Data preparating and feature engineering | 5 | $4,000 | ||
| Modelling PD for address on Celo and xchain | 20 | $16,000 | ||
| Reporting and tracking dashboard | ||||
| Update subgraph, API | 5 | $4,000 | ||
| Set up automatic tracking of covernants, collateral performance | 10 | $8,000 | ||
| Design and build dashboard for Untangled pool on Celo | 20 | $16,000 | ||
| $75,000 |
Success Criteria
- The protocol has been successfully deployed on the Celo mainnet, including all relevant contracts. A comprehensive audit has been conducted before the mainnet deployment, and an audit report is available here.
- We will provide a budget for ongoing protocol maintenance.
- Completion of the legal structuring exercise, including appropriate jurisdiction and legal structure.
- Framework for a robust on-chain monitoring and reporting system, including a dashboard facilitating timely remedial actions in the event of a credit event.
Reporting
Milestone 1: For fund withdrawal, we will comment on the forum post, indicating the amount of CELO tokens swapped for $200,000 USD. We will also set out a final budget for ongoing protocol maintenance.
Milestone 2: Regarding the legal structuring, once completed, the legal structure will be made available in a forum post, including legal entities and documentation.
Milestone 3: A forum post on the RWA credit monitoring framework and a dashboard will be provided (see attachment for details).
Known Risks
Credit/Counterparty Risk: This is the risk that counterparties of underlying credit exposures may fail to repay the lending pool. We mitigate this risk through various means:
- Many upcoming pools on Celo are co-invested by funds managed by the above-mentioned regulated asset manager, which has thoroughly vetted the asset originators with a strong repayment track record.
- Untangled Finance, the developer of the Untangled protocol, is actively developing machine learning-based credit models that predict the probability of defaults and expected losses based on both portfolio and non-portfolio data.
- RWA credit on-chain monitoring is being built as mentioned above.
Legal/Regulatory Risk: Ensuring clarity, transparency, and familiarity for investors in the legal construct is crucial, from the legal relationship of the investor to the structuring of off-chain legal entities. This aspect will be addressed through the legal structuring exercise.
Smart Contract Risks: The latest deployment has undergone an audit by Verilog. You can find the audit report here.
Implementation
Budget
To facilitate the withdrawal of $200,000 worth of CELO. Any unutilized CELO for the legal structuring workstream will be returned to the community fund.
Multisig
A multisig wallet hosted on Safe will be employed to manage and deploy the funds, requiring a 2 of 3 signature threshold. The multisig wallet is at 0xE35A476Ac46c34C15d90C6b2efd3FAFAFB815BeB and can be found here. The signers for this multisig are:
- Manrui Tang (Untangled)
- Isha Vashney (Celo community member)
- TBA
Appendix
This post has been updated for detailed budget.