We are still working on the following document and in relation with other Venus contributors but wanted to share with the work in progress with the broader community
Rationale
This VIP proposes the creation of a legal entity, VE68, the deployment of a Savings VAI smart contract and a bIB01 integration smart contract.
References
- RWA Strategy - A first Proposal
- Proposal: Real-World Asset initiative
- The solution to re-peg VAI is coming
Summary
Motivation
Thanks to the different efforts to fix the peg (prong 1 of the RWA strategy), the VAI peg is now restored and VAI minting has been re-enabled.
As outlined in the RWA strategy, it is now time to fire the boosters. This involves two main components: the creation of sVAI, an interest-bearing smart contract designed to provide utility to VAI, and investment in bIB01 to channel the demand for VAI towards an interest-bearing investment. It’s important to note that the yield from sVAI is not linked to bIB01 investments. Instead, the yield will be determined by Venus governance and will be based on the VAI borrow rate.
Specification
Requirements for VE68
VE68 will serve as the conduit of Venus Protocol to perform RWA operations. It will be an orphaned Cayman Foundation, modeled after the structures established by MakerDAO for RWA investments (e.g., RWA Foundation and TACO). The name ‘VE68’ is inspired by a quasi-satellite of Venus, highlighting the loose relationship between Venus and VE68. Notably, the articles of association will stipulate that the directors of VE68 should, if feasible, implement Venus DAO Resolutions and be constrained solely to those. However, the two entities will operate independently of each other.
Venus and VE68 will be connected through a deed poll issued by VE68. This deed poll stipulates that VE68 will borrow from the Venus Protocol to invest in RWAs and will subsequently pay the proceeds to the Venus Treasury (or any analogous smart contract).
For the avoidance of doubt, all operations are meant to be conducted on-chain via smart contracts while ensuring compliance with legal obligations.
PS: Following good advices we are also exploring Costa Rica, the following section might therefore change depending on the outcome.
Setting up VE68 will require legal groundwork from a Caymanian law firm. The cost of this workstream is expected to be approximately $25,000. Services provided by this law firm will include drafting of the VE68 constitution and associated resolutions, as well as drafting of the regulatory memorandum.
Operating the VE68 will require service providers for the roles of director, supervisor, and secretary. Given the nature of the operation, we recommend using a single service provider to minimize costs. The anticipated expenses for this workstream are as follows:
- Incorporation fees - $3,000 (including govt fees of approx. $1,400 which are payable annually)
- Registered office and secretary - $5,000 to $8,000 per year
- Independent director - $15,000 to $30,000 per year
- Independent supervisor $10,000 to $20,000 per year
Further legal analysis might determine the need for a subsidiary of VE68 to segregate different RWA operations. This could result in an additional $10,700 in setup costs, of which up to $8,000 would be a recurring annual expense, covering service provider fees for the subsidiary’s registered office and secretary.
In summary, we anticipate setup costs ranging from $65,700 to $96,700, which includes annual operating expenses between $36,400 and $67,400.
Requirements for sVAI
sVAI should be ERC-4626 compliant and should let Venus governance (or any contract to which right is approved) to view an internal interest rate. We recommend taking inspiration from the Maker MCD Pot contract.
Investment in bIB01 requirements
bIB01 is a product issued by Backed Finance and tracks one-to-one the iShares $ Treasury Bond 0-1yr UCITS ETF. For an extended discussion of bIB01, review to the Steakhouse review that was prepared for MakerDAO.
The smart contract will have the following functions:
- buyAsset(amount): will send
amountUSDC of this contract to Backed Finance address to buy bIB01 tokens. - sellAsset(amount): will send
amountbIB01 tokens of this contract to Backed Finance address for redemption - recover(): allows the transfer of any ERC20 compliant token to a destination
buyAsset and sellAsset will be assigned an Ops role, while recover will have an Admin role. Initially, only Venus Governance will possess these roles. We recommend manual calls to both buyAsset and sellAsset, made either by Venus Governance or an operating multisig. Should the process become too labor-intensive, a smart contract can be introduced to automate the buy and sell operations.
The contract should also act as a USDC PSM. Technical implementation might require or suggest alterations.