This improvement proposal builds upon our strategic partnership with Finance Ventures, seeking to integrate the “CRE1p” token to be integrated as collateral in the Hifi Protocol. The intent is to facilitate Finance Ventures’ ability to extend credit to borrowers using Hifi’s DeFi infrastructure. The proposal sets a collateral ceiling of 20 CRE1p token, a fixed oracle value of $62,500 USD per CRE1p token, and a 125% collateralization ratio (80% loan-to-value).

The CRE1p Token is a digital representation of an operational commercial real estate property, its respective business revenues, and a personal guarantee of its respective owner. Similar to HIP 3 and the VW Micro Bus, Finance Ventures will originate loans to borrowers using this asset as collateral. Capital for the loan will be sourced from Hifi’s Protocol. The CRE1p Token cannot be liquidated on-chain, and so appropriate provisions exist in the contract for liquidation of the real-world asset.

The property is a 93-unit residential building built in 2001. The professionally managed facility is located in Utah, USA. A recent valuation of the property valued it at $7.85M. This proposal seeks to add a $1.25M fractional share of the asset, including personal guarantees from borrowers, to Hifi’s Protocol.

Details

Under the proposed Agreement of Association, Hifi DAO will enable Finance Ventures to leverage the Hifi lending protocol by utilizing the CRE1p Token as collateral to secure credit represented by hTokens.

As per the agreement’s conditions, there will be a collateral ceiling of 20 CRE1p tokens, which will have a fixed oracle value of $62,500 USD per CRE1p Token and a 125% collateralization ratio (80% loan-to-value). The collateral ceiling is set as a cap on the credit extended to Finance Ventures in this agreement.

Upon this proposal’s success, Hifi DAO will execute the necessary variable changes to the Hifi Protocol’s Fintroller. Hifi DAO will also enter into a legally binding Agreement of Association with Finance Ventures, which can be viewed here.

To safeguard Hifi DAO’s interests, Mainframe Group Inc. has been designated to monitor Finance Ventures’ monthly financial updates. Finance Ventures is required to comply with specific loan eligibility criteria to ensure that only high-quality loans are financed and must also provide regular monthly reports.

In case of a default by Finance Ventures’ borrower, an explicit collateral liquidation process is in place to ensure the recovery of the outstanding hTokens. More information about Hifi’s framework can be found on the blog, here.

Benefits

Increased TVL: With the ongoing success of HIP6: Hifi’s Liquidity Bootstrapping Effort, adding our commercial real estate as collateral increases utilization of our growing protocol liquidity and pushes us closer to our goal of getting to $25M in TVL!

Expanding Hifi’s Utility: The expanded partnership with Finance Ventures and integration of commercial real estate as a supported real-world asset extends Hifi’s real-world utility.

Expanding Strategic Partnerships: The partnership with Finance Ventures allows Hifi DAO to continue to expand its reach and engagement within the DeFi sector and traditional finance.

Risk Management: By establishing a collateral ceiling and a fixed oracle value, the proposal provides a balanced risk management approach while ensuring transparency and stability.

Voting

Upon majority approval, Hifi DAO will execute the partnership agreement with Finance Ventures and take the necessary technical steps to integrate CRE1p Token into the Hifi Protocol with the set collateral ceiling and fixed oracle value.

If the majority vote disapproves, no further action will be taken regarding this proposal.

It is recommended that DAO members review the full agreement for a comprehensive understanding before casting their votes.

The proposal is now live. Reminder that there is now a 48 hour voting delay before the voting snapshot is taken and voting begins. Please ensure you have delegation set up on your account if you wish to participate in this governance proposal.