For DeFi lenders

DeFi (decentralized finance) is one of the most successful use cases of smart contracts. However, its use cases have been restricted within the blockchain ecosystem. In order for DeFi to become mainstream and perhaps eventually replace parts of Trad-Fi, it needs to solve actual pain points in the real world, such as interacting with real world assets.

One of the biggest problems with DeFi right now is the instability of DeFi lenders' collateral pools or treasuries. Take one of the biggest DeFi institutional lenders, MakerDAO, as an example. It is backing $6bn DAI (the stablecoins they issue) with $12bn collateral, which is an extremely high collateralization rate. This is because its underlying assets are crypto tokens, which are both highly volatile and have volatility correlated with each other. As a result, when there is a downturn in the market, most tokens go down. In order to insure against this tail risk, DeFi lenders have to keep an inefficiently high collateralization rate in normal times, leading to extremely low capital efficiency that is even worse than the traditional banking sector.

A good way to solve this is by incorporating real world assets (RWA) in their collateral pool. They are both less volatile and contain volatility orthogonal to that of the tokens. As classic finance theory suggests, diversification is the only free lunch. However, DeFi lenders may not have the in-house expertise on specific asset classes such as real estate, government bonds, commercial loans, and it’s very difficult for them to deal with real-world legal and operational issues.

This is precisely where Robinland comes in, we serve as a bridge between DeFi lenders and RWAs, such that DeFi lenders can sit in their comfort zone and interact with us on a smart contract basis. Our goal is to onboard projects that are highly secure and stabilize their treasury as well as expand their RWA collateral pool in a hassle-free way. In order to achieve that, we offer two services.

Transformation of asset class

We use an SPV (Special Purpose Vehicle) to hold a piece of real estate asset and issue security tokens via a STO (Security Token Offering, the only legal way to create tokens pegged to RWA in the US in compliance with SEC regulations) and the resulting security tokens can be used in the ecosystem.

Sourcing of high-quality real estate

With our industry expertise and connections, we can source and select the highest quality real estate projects that suit DeFi lenders’ needs such as senior lien, fully secured real estate debt with certain LTV (loan to value ratio), DSCR (debt to service ratio) and loan term (i.e. length).

Good to know: depending on the product you're building, it can be useful to explicitly document use cases. Got a product that can be used by a bunch of people in different ways? Maybe consider splitting it out!