DeFi Money Market (DMM) Foundation: FAQ

This FAQ begins with the most common and pressing questions that arose after launching DMM. As such, the order may seem non-sequential: specific and in-depth questions at the top, with more basic questions and information found towards the end. For a general introduction into the DMM itself, please read this blog post or the whitepaper.

1. How can users confirm that the DMM Foundation actually owns and/or has rights to the principal and income streams that are represented by the real-world assets on the explorer?

DMM aims to create the first blockchain-based money market that moves beyond cryptocurrency-only collateral and into the much larger pool of real-world assets outside of the blockchain. The DMM Foundation is working in conjunction with its selected and to-be selected global 3rd party platform servicers to establish a first-ever verification blueprint that will periodically act as a secondary confirmation that the DMM Foundation has the necessary contractual rights to the real-world assets represented in the explorer, as previously verified by the servicers. As we believe this is the first time this undertaking has been deployed, the DMM Foundation is actively working with its servicers to develop a standardized protocol that is real-world asset agnostic for secondary confirmation by an unrelated, independent and specialized third-party (to be clear, this third-party is a secondary confirmation and different from the verification performed by the servicers). While the development and establishment of this protocol is being finalized, the DMM Foundation will be conducting a request for quotation amongst different global providers in the legal, rating and business advisory services with a specific decentralized finance focus and implementation.

2. What is a Servicer?

A platform servicer is a third-party business responsible for collecting payments from borrowers and for remitting these payments to the issuer for distribution to the holders. The servicer is typically compensated with fees based on the volume serviced. The servicer redacts information and shows the contractual flow of ownership including placing DDM Foundation on the requisite documents. The servicer is generally obligated to maximize the payments from the borrowers, and is responsible for handling delinquencies, foreclosures, repossessions and asset sales. For more representative info: https://www.investopedia.com/terms/l/loan_servicing.asp https://www.consumerfinance.gov/ask-cfpb/whats-the-difference-between-a-mortgage-lender-and-a-servicer-en-198/

3. What is the formation around the DeFi Money Market Foundation, and where is it based?

The DMM Foundation was established and has an office in the United Arab Emirates in cooperation with the UAE government’s Dubai International Financial Centre (DIFC). The DIFC is home to an internationally recognized, independent regulator and a proven judicial system with an English common law framework and one of the world’s most advanced financial centers, and the leading financial hub for the Middle East, Africa and South Asia (MEASA), which comprises 72 countries with an approximate population of 3 billion and a nominal GDP of US $7.7 trillion. The DIFC was awarded ‘FinTech Hub of the Year’ in the 2019 FinX awards. This award reflects DIFC’s achievements as a global hub for innovation and excellence. With a 15-year track record of facilitating trade and investment flows across the globe, the Centre connects these fast-growing markets with the economies of Asia, Europe and the Americas through Dubai. Major banks and financial institutions from across the globe have set up in DIFC to undertake business in the region. Today, it offers one of the region’s most comprehensive FinTech and venture capital environments, including cost-effective licensing solutions, fit-for-purpose regulation, innovative accelerator programs, and funding for growth-stage start-ups. https://fintechhive.difc.ae/

4. Who founded and is behind the DeFi Money Market Foundation currently?

The Foundation’s members can be seen on the website, https://defimoneymarket.com/, along with links to their past experience. There are four founding members, with more in the process of joining the mission.

5. Why is information in the DeFi Money Market Explorer redacted?

Redaction is the most common solution for concealing private data in the public record from public view. This solution allows sensitive, private, or confidential information which is exempt by law from disclosure to be covered in a manner that does not distort the meaning of the record. The servicer redacts Information to comply with different global privacy laws and regulations and show contractual obligations. A few of the many examples of applicable privacy law concerns include the The Global Data Protection Regulation (GDPR) and the United States of America’s privacy laws which is a complex patchwork of national privacy laws and regulations that address particular issues or sectors, state laws that further address privacy and security of personal information. Though the GDPR is a law originating from the EU, it applies to businesses all over the world. The DMM Foundation is doing something that hasn’t been done before, and making each individual asset information public, means pieces need to be redacted. This is light years better than the current traditional financial system where you’re essentially clueless to the content of the financial instrument you’re buying into. In other words, redaction of select information still leads DMM assets to be much more transparent than the status quo. The DMM Foundation is providing all the information it legally can, but there’s no obligation to use the system.

https://www.autosafety.org/wp-content/uploads/2016/04/NHTSA-Redaction-Manual.pdf

6. Why do some of the titles lack seals or show void statements?

Title documents come in both electronic and paper format and are different for every jurisdiction. Many states have added in technology that prevents counterfeiting or fabrication of the original title. Much of what is seen on the documents is a result of the servicer’s scanning and anonymization process which is required by law not to disclose nonpublic personal information. Parts of the document are blocked out which is why you see pure white on top of the original off-white of the document, and many modern seals on titles are invisible to scanners to prevent fraudulently replicating it. A similar function happens on many checks to prevent check fraud. It’s also why you see the hidden watermark “VOID” added to many of the documents. All original titles and other ownership paperwork will be managed and stored with third-party servicers, as explained in the Servicer question (Question 2) contained in this FAQ. For a representative fraud prevention discussion please see this New Jersey Department of Transportation article: https://www.state.nj.us/transportation/about/press/2003/032503.shtm

7. How will the DMM Foundation manage portfolio assets?

The DMM Foundation’s bridge between Ethereum digital assets and global real-world assets is realized through a contractual interest in many different global real-world assets that generate verifiable income. The DMM Foundation will work with many different industry vetted global platform servicers.

8. Thoughts on Asset Depreciation?

As for concerns about the value and depreciation of the assets behind the portfolio, this isn’t untested waters as vehicles are one of the most liquid asset classes in the world. When it comes to the DMM Ecosystem, mTokens aren’t backed by individual assets, but rather the aggregate. The value and future depreciation of the underlying asset are important things that we look at and vehicles are just the first of many asset classes to come. Check out page 7 of our whitepaper for more information: https://defimoneymarket.com/DMM-Ecosystem.pdf

9. What is the DMM DAO?

A core belief of the DeFi Money Market Ecosystem is every stakeholder in the ecosystem should be able to participate in the decision-making continuously, without having to rely on, or trust, anyone. The DMM DAO’s members will be initially sourced from the core team and community members, and is composed of owners of the governance token, DMG, which holds voting rights within the ecosystem’s continuous approval voting system for new features as well as its direction, resulting in a democratic and decentralized structure. Governance tokens are fixed in quantity and it is anticipated that within 12 months of launch, ownership of both the DMG token and the DMM protocol itself will be completely distributed and decentralized.

10. What is the DMM Governance Token?

The DeFi Money Market governance token, DMG, is the tool through which the community governs and grows the DMM Ecosystem. DMG grants its owner the right to vote in and direct the DMM DAO. As we look to build a vibrant global community, DMG is a critical component that will engender broad participation and eliminate centralized control risk. Specifically, DMG effectuates governance of the DMME via the DMM DAO, which will be given control over the Ethereum smart contracts and adjacent assets.

11. What tokens does the DeFi Money Market pay interest on?

Users of the DMME will, at time of writing, be able to receive a stable 6.25% interest on their DAI and USDC by depositing the tokens into the DMME and holding the corresponding mDAI and mUSDC assets. The mAssets can be converted back into the underlying tokens at any time to receive back the original deposited principal plus interest earned. The DMM Foundation has plans shortly after launch to release mETH, offering a similar high-yield savings on Ether.

12. Where does the interest paid to mAssets come from?

All yield provided to ecosystem participants is overcollateralized by real-world assets that generate income greater than interest owed. All of these real-world assets are transparently made available on the DMM Explorer.

13. How are mAssets created?

mAssets are created by applying the DeFi Money Market Wrapper (DMMW) — an ERC20 smart contract wrapper that can be placed around any Ethereum token, allowing it to generate income and provide diversification, secured through the overcollateralization of real-world assets represented on-chain. Access to the token is borderless and permissionless, making it accessible everywhere.

14. What is the DeFi Money Market Ecosystem?

The DMME is an Ethereum-based and decentralized protocol that allows the creation of DeFi Money Market Accounts (DMMA) — a new DeFi native asset class that allows any holder of an Ethereum-based digital asset to earn interest backed by real-world assets represented on-chain. DMMAs are specific to each individual Ethereum digital asset (Dai Money Market, USDC Money Market, etc.) which empowers consumers to remain in and choose the digital asset class that best suits their needs or requirements. The asset that results from the creation of a DMMA is called an mAsset, as seen above.

15. What is the goal of the DeFi Money Market Ecosystem?

The goal of the DMME is to provide the ability for anyone globally to once again be able to earn interest on their money. Current traditional Money Market Accounts provide for very low interest rates globally (Europe: -0.46%, UK: -0.67%, US: 1.5%, Japan: 0%). The DMME looks to provide consistent and stable returns at a rate many times superior to traditional alternatives (our two initial products mUSDC and mDAI both carry an APY of 6.25%). We believe and hope the DMME will be the beginning of a multi trillion-dollar opportunity and shift to the return of earned interest to the global monetary landscape.

16. What challenge is the DeFi Money Market Ecosystem is trying to solve?

While there have been many wonderful developments in the Ethereum ecosystem on new ways to earn interest on your crypto holdings, we believe a crucial gap that needs to be filled is blending real-world assets with digital assets. By bridging these two ecosystems, we are able to bring the strengths of both ecosystems to the table. This allows us to create a more robust offering while providing total transparency in a trust-minimized, permissionless, and borderless manner to the underlying assets.

17. What role does Chainlink play in this collaboration?

Chainlink’s role in this system is to reliably and securely take information on the assets that back the DMM Ecosystem, and publicize them on-chain. This includes the flow of off-chain funds that underpin the system, as well as the valuations of these real world assets. Between the two prior bits of information, Chainlink will be able to accurately and transparently portray the health and collateralization of the DMM ecosystem as well as inject the necessary information needed to assess risk by knowing how their crypto is being allocated to generate interest.

18. How is the system designed?

The architecture for the DMM Ecosystem can be broken down into three components — a suite of Ethereum smart contracts, a treasury management function, and Chainlink-compatible data feed for providing off-chain data to the suite of smart contracts or public consumers of the data. These three systems come together to form the DMM and enable the creation of on-chain mAssets which are backed by off-chain real world assets.

19. How will the transition to the DAO occur?

The distribution of governance will occur over two distinct transitions. The beginning of the process to decentralization starts with a transitional DAO acting as a custodian, essentially the role DMM Foundation core team fulfilled in the ecosystem at implementation. This initial transition will remove central points of control and help ensure that the protocol is unable to be captured or censored, while also exploring the movement of treasury control from the core team members to a DAO. The transitional DAO will consist of a limited number of members with equal voting rights. Membership will evolve to include key token holders or their representatives, along with fewer members of the core team. The distribution of DMG tokens will further this goal. A critical aspect of this migration is that a single legal entity will no longer be responsible for the protocol or its control. Multiple independent entities will act as service providers to the DAO, with no single service provider having unilateral control over the protocol or its governance. Functionally, this will look like multiple independent teams financed by revenue from the DAO to maintain critical functions for the ecosystem’s protocol. For more information, you may refer to the DMM whitepaper.

Final Thoughts

We really appreciate the community’s involvement, experimentation, and questions regarding DMM. We are excited for its future, especially as the community gets more involved with its governance.

• Twitter — https://twitter.com/DMMDAO
• Reddit — https://reddit.com/r/DMMDAO/
• Discord — https://discord.gg/9dM8yaA
• Telegram — https://t.me/DmmOfficial
• White Paper — https://defimoneymarket.com/DMM-Ecosystem.pdf
• Explorer — https://explorer.defimoneymarket.com
• Earn Interest via mAssets — https://app.defimoneymarket.com