[OGP-DRAFT] - Vendor Finance Seeding

Governance Proposals
1

Proposal Title: Vendor Finance Seeding

Proposal Chain: Arbitrum

Type (Choose one): Funding Proposal

Proposal Author: Netrim

Date: 13/AUG/23

Executive Summary

Vendor Finance serves as a peer-to-peer lending platform that ensures a secure environment free from the concerns of liquidation. Some features worth noting are:

No Liquidations

No Oracle Dependency

Fixed Terms

Fixed Rates

Permissionless

We propose the OATH Token holders to approve the allocation of up to USD 250k (denominated in OATH, ERN or other assets) to be seeded on the applicable pools created in the dapp.

Proposal Motivation:

The proposal aims to solve the problem of not having a liquid borrowing/lending market. Through our combination of oracle-less, liquidation-free lending pools, we can facilitate borrowing and lending of OATH and ERN. By solving this problem we are unlocking composability for the token holders.

Just as decentralized exchanges open doors for token trading, Vendor facilitates protocols as well as every day users within the ecosystem to deploy borrowing and lending markets for a broad spectrum of tokens. They are empowered to both capitalize on token price fluctuations as well as access the underlying value of their assets for other investments, all the while maintaining exposure to the underlying collateral asset.

Team Experience

For approximately 1.5 years now, Vendor Finance has been dedicated to providing the DeFi community with an innovative approach to lending - delivering peer-to-peer, fixed-term, fixed-rate, non-liquidation loans without an oracle dependency. These loans are facilitated through isolated lending pools, where the terms are established by unique lenders, and the funds become accessible to multiple borrowers.

0xTaiga

  • Co-Founder & Lead Smart Contract Developer
  • Former Unity and Metamask engineer. Currently security auditor at Consensys Diligence
  • https://twitter.com/0xTaiga

Lorem

  • Co-Founder & Frontend Developer
  • 5+ years of web development and application development. 3 years of web3 development. MEV searcher
  • https://twitter.com/lorem___

MaxCoins

  • Industry Advisor
  • 25 years in professional options trading as well as fund management in tradfi

Forrest Chew

Netrim

Key Objectives & Success Metrics

The proposal aims to generate a composable usage out of both OATH and ERN, either directly or indirectly. Taking into account the increased user engagement seen on the OATH discord we can expect upwards of 75% utilization.

ROI cannot be estimated at this point since that will depend heavily on the strategies used within Vendor. If approved, we will work jointly to advise on the best possible strategy that we see viable.

As a reference OlympusDAO voted to lend 500k AGAINST their gOHM governance token at 5% APR, 6 month duration and 75% LTV. All the funds were borrowed in less than one week.

Length of Engagement & Budget Breakdown

If approved we are aiming for a 3 to 6 month engagement using one or more pools to be seeded by the OATH Treasury, which will allocate up to $250k in a combination of OATH, ERN or any other asset they deem useful.

Partnerships

On top of the currently supported mainstream assets, Vendor currently supports a wide variety of long tail assets that have difficulty in achieving composability. Vendor will act as an advisor on the terms sought after approval and will work with the OATH Foundation to maximize composability without increasing risk unnecessarily.

Risk Assessment

There is an added risk of integrating/interacting with Vendor contracts, but we’ve taken numerous steps to ensure the safety of our users.

Because of this plus the oracle less nature and non liquidation mechanics within Vendor, we don’t expect a higher risk than what is currently managed by the OATH Foundation.

Additional Details

The assets requested are the start of a long and lasting partnership by providing OATH holders a safe venue to interact with. The assets will NOT be under Vendor Finance control, the OATH Foundation and/or the users that interact with Vendor remain sole custodians since Vendor solution is non custodial.

References

https://vendor.finance/

https://twitter.com/VendorFi

1 Like
2

Welcome to the Oath forum my friend.

This proposal goes above my head. So I don’t have much to share.

My 2 cents is: I don’t think that using oath on arbitrum will be a good idea since the plan is to focus liquidity on Optimism. But, if the big brains think the proposal is good, maybe focusing on ERN is a good idea.

Good luck.

1 Like
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will do some research and get back to you on this one!

2 Likes
4

Seconding @NauLxD, the proposal being arbitrum focused makes this a tough one. Also the $250k seed value is pretty hefty. Would like to see how more of the community responds to this though.

2 Likes
5

The 250k is a ball park figure so it makes sense on a month to month operations, but I specifically worded the draft with “up to” so in the end governance can decide what type of investment is it willing to make.

It is true that Vendor is currently deployed on Arbitrum and Ethereum, we haven’t seen yet the opportunity to pursue other chains.

6

I’m personally not a fan of leveraging OATH anywhere but am certainly interested to explore ERN and stERN lending strategies.
I’m happy to review and consider details with GPRC.
Hopefully we can capture more community thoughts here.

7

Hey yuvi, the idea behind the proposal is NOT to leverage OATH directly from the treasury, but the other way around.
In the example I provided regarding Olympus, what they did is used their treasury to actually create a NEED for gOHM.
If oathies thought this was a valid strategy:
Treasury provides X and asks for OATH, selects LTV, term and Yield.
Borrowers provide OATH and get X.
If people repay, the treasury accrues the return denominated in X.
If people default, the treasury accrues OATH.

The idea with this is to provide a safe venue for OATH plus ANY treasury asset that is deemed profitable since there are no liquidations on Vendor.

Let’s see the mirror scenario:
Treasury provides OATH and asks ERN, 80% LTV, 3 months, 15% decaying yield.
People will need to a) buy ERN or b) mint ERN.
If people repay, the treasury accrues OATH.
if people default, the treasury accrues ERN.

I hope this will clear up the composability unlock that Vendor can provide to all oathies

1 Like
8

Understood but to me the ROI of a borrow/lend market servicing OATH is low whereas a market servicing something like ERN/ETH or ERN/BTC can generate a lot more interest and a lot more velocity, the upside of which can be used to support the OATH ecosystem in other ways :slightly_smiling_face:

1 Like
9

On that second point we are on agreement for sure

1 Like
10

Hi Bebis, did you have the chance to check the proposal, or the attached links? Any questions you may have is welcome.

11

Hey Netrim, I think before we take on a lending service provider, we need to resolve some of OATH’s liquidity issues. It seems like a cool, low-cost effort but probably better suited for a few months from now.

12

Completely understandable, which is why the proposal actually looks at Byte Masons available assets, not only OATH is in scope.

With the proper strategy and LTV settings it could theoretically be used to generate a specific flow for ERN that allows it to return to peg, but the specifics would depend on available assets to pair and the correct flow of information.