Cash box beta rollout explained

Before reading this article it would be helpful to refer to the whitepaper and its part 3 in particular.

Below is a video on how CashBoxes work

The next stage of our beta testing involves the cashbox and the liquidity layer infrastructure which is probably the most important piece of the ecosystem.

We have secured a commercial property in Melbourne, it will be acquired by a SPV (Special Purpose Vehicle). Details on this will be provided at launch.

The share registry for this SPV is tokenized. Which means those who own the tokens are effectively part owners of the property and have exposure to the capital gain and rental yield etc.

It is fair to say that before the Company sells these tokens via a public sale it will have an offer document and adhere to any AML/KYC restrictions as required by law.

While this may seem intimidating the team at Open DAO have ample background in this space. At a later date 3rd party fractional property providers like realt.co, Brickx, Domacom etc may also enter the system.

These tokens are now supplied on the OTL as collateral and property fraction owners can leverage their position this way.

The question becomes what happens if these borrowers do not repay their debt. On Compound and other such systems anyone can run a liquidation bot and take possession of the collateral.

Same would be the situation in our case. However the collateral in this case is off chain. Yes it is tokenized and there are fund structures etc in place, but a liquidation bot might not want to go through the hassle of taking the property tokens and becoming a shareholder in the fund etc.

The cashbox is meant as a lubricant in the process.

It provides a place where the liquidation bot can present their real world collateral tokens and get stable coins.

The cashbox is in effect a perpetual counterparty to the collateral tokens.

Property fraction tokens get deposited in the cashbox and the cashbox owner (cashbox token holders) can then present them to the fund and get themselves recorded on the registry as owners of the underlying asset and determine if it needs to be disposed off in return of cash of continue to hold them.

Alternatively the cashbox token holders can take possession of the collateral tokens and cycle back to the cashbox to get stables from future cashbox depositors. A price oracle from the registry keeps the cashbox collateral price updated.

In order for this to happen it is obvious that someone has to deposit cash in the cashbox. There is also a bit of hassle involved in this as technically the cashbox owners are not property owners till they present themselves on the registry. Once you deposit in the cashbox you get cashbox tokens back, it is not staking, it is buying. You can in theory circle back to get stables from the pool at a later date assuming there is enough liquidity but your last resort is taking the shareholding by completing an application process with the registry at which point you have to probably do the required AML KYC.

The presence of a liquid pool that acts as a counterparty to the liquidators is the crux of the system because once you have onchain liquidity for the off chain asset, it is as good as any other onchain asset.

Hence the deposits in the cashbox become an important action that needs to be incentivized. The cashbox holders get fees anytime their liquidity is used, in addition to that those who get cashbox tokens can stake them to earn OPEN tokens.

This is what is being tested in the second stage of the beta.

I imagine there are several questions.

What are the risks as compared to the OTL deposits? How do we know that there is a real asset? How is the price of the real world asset determined etc etc.

For the last 2 it needs a detailed answer especially around the trust minimization aspect. And a detailed article will be published for them later.

For now, as compared to the OTL deposits it is riskier. In the OTL you are a lender. Here you are effectively quasi-equity, your rate of return is also likely higher due to equity + fees exposure. We will also calibrate OPEN rewards higher for this action.

There is a good chance your deposits will never get used up because no one liquidates. To make sure the funds deployed are actively used we are creating cashbox v2 to deploy them to other money markets while they sit there. This will follow in the coming days after cashbox v1.

There will be a fund in place that acquires the real world asset and proper legal structures will be in place. We have done over 30 full retail prospectus based offerings so this is our bread and butter, we know our stuff in this area.

But more detailed exposition beyond what is already in the whitepaper will follow in the coming days from a more generic perspective on how to minimize trust in the interactions.