Current market conditions have resulted in a number of large actors getting wiped out or suffering severe distress in their portfolios. Although the Frax protocol has made it out largely unscathed, it was still affected by certain exploits such as the one that afflicted Rari which it is still trying to reconcile for.
In order for Frax to grow in resiliency, it must develop better practices when it comes to approving and deploying loans. This is especially true with the coming release of Fraxlend. This will not only benefit the protocol internally, but externally communicate how we are further developing a standard of best practices.
I am not an expert in this field, but I know there are members in this community who are. Open to any thoughts in this area. I think the proper line we must balance is how to create a system that works without becoming too bureaucratic.
Agreed. This is definitely something that we can work on. I believe @sparkes25 has drawn up an FIP related to this.
i really think this is something we should put some time in to, im all for RWA lending but am also aware of its risks.
do we have anyone in the community that has skills in this area that can look at this from a non-bias point of view, or maybe there is another protocol like Truefi that can help us or maybe we can use them as a guide of how to go about doing this.
MARK11 has has a pretty good and simple idea.
we treat each RWA lending protocol like we treat DeFi lending protocols.
Like our gauge pool for aave , we make each RWA lending protocol pass a governance vote to have a pool added to the gauge and then private investors can DYOR and invest as they please.
we then assess the risks involved and use a governance vote to see if we should add a small % of protocol funds to the pools. we should also put a hard cap on the total exposure FRAX protocol has in this type of lending (in the 0-3% market cap range)
Something like a fund of funds model could work. Frax lends to other lenders and then lends to a senior pool. Lender itself is junior and takes first loss. Closest there is here is Goldfinch which is doing this already afaik
just bumping this to get more peoples views on RWA lending and how we can do it safely
On-chain credentials / reputation is something that I think could prove useful here for sure!
but who will assess this?