AIP #7: Add ALPHA Tokens (NAOS Finance) to Alkemi Earn

Proposals
#1

AIP #7: Add ALPHA Tokens (NAOS Finance) to Alkemi Earn

Author(s): @TKpride

Summary

NAOS Finance is a DeFi lending protocol that facilitates the borrowing of crypto assets by using real-world assets (RWA) as collateral. NAOS Finance holds financing licenses in multiple regions and has originated over $300M of income-generating RWA to deploy on-chain. NAOS is backed by top tier investors such as Coinbase Ventures, Huobi, Crypto.com, Alibaba Group, and Spartan Group, among others.

RWAs are represented by synthetic interest-bearing “ALPHA tokens”, income interest rate is fixed, consistent and accrued over time. All RWAs are insured to ensure the safety of the funds. NAOS proposes to add “ALPHA tokens” to Alkemi Network’s “Open” and “Verified” pools.

Abstract [What?]

By adding ALPHA tokens to Alkemi Network’s “Open”/”Verified” pools, NAOS Finance will be able to lend ALPHA tokens and borrow stable coins on Alkemi Network, thereby providing fixed and stable yield for the Alkemi Network DAO and the wider community.

Motivation & Goals [Why?]

While the current DeFi TVL surpassed $200 billion, the source of yield is still predominantly subsidized by projects’ native tokens, which is volatile and unsustainable. RWA represents a trillion-dollar opportunity for DeFi to expand beyond its existing use cases and provides competitive, consistent and fixed yields in stable coins.

NAOS is uniquely positioned in DeFi with its focus on compliance, both on borrowing and lending. NAOS interfaces with real-world institutions directly, originates RWA with its financing licenses, and conducts thorough due diligence on the assets. All lenders on NAOS are required to complete exchange-grade KYC and AML processes.

The NAOS-Alkemi Network proposal aims at scaling RWA on-chain and improving capital utilization, creating a sustainable and competitive fixed yield product similar to Anchor Protocol.

Specification & Implementation [How?]

ALPHA tokens are based on the ERC-20 standard, therefore, the implementation should follow the implementation of any other token on Alkemi Earn. Once Alkemi Network adds ALPHA tokens to its “Open”/”Verified” pools, NAOS Finance will deposit ALPHA tokens for stable coins (USDC/USDT).

Vote

Sentiment check [DEADLINE: 06/05/2022]:

  • :white_check_mark: Yes - Approve the proposal

  • :x: No - Do not approve the proposal

0 voters

#2

@TKpride,

What is the ALPHA token address? What is the average daily liquidity of this token?

#3

Alpha token is the tokenized representation of the underlying real world assets （RWA）. For example, a $10 million RWA （inventory, corporate loan, receivable） is represented by 10 million Alpha Tokens. Alpha token is stable and accrues interest over time.

#4

@TKpride
ultimately what I’m after is the ability to liquidate positions. ERC-20 assets could be lent against, to the extent they are able to be liquidated. Recourse to collateral outside of an ERC-20, would be outside the scope of the protocol’s ability to lend against. In order to make an informed decision on whether or not to underwrite to a specific ERC-20, analysis of the market surrounding this ERC-20 must be completed. So which ERC-20 is being proposed as collateral?

#5

Alpha Token is a synthetic ERC-20 created on NAOS Protocol, with the sole purpose of representing the underlying RWA. Alpha Token can be redeemed or liquidated in the corresponding NAOS RWA Pool.

Unlike crypto native assets, RWA is stable in face value and is not subjected to market volatility - hence no appraisal or liquidation issues. RWA default risk is also accounted for with insurance coverage to ensure the safety of the fund.

The proposal is exactly the same as the one NAOS submitted and approved by MakerDao. NAOS tokenizes RWA and deposits Alpha Tokens in MakerDao for liquidity, and pays fixed and stable dollar based interest generated from RWA. At the end of the loan term, Maker redeems Alpha Tokens for DAI.