The DMM Foundation is proud to announce the first application to be an affiliate member of the DMM DAO. Qori Capital, who ran one of the largest hedge funds in Peru, will be applying to take on the role of further introducing assets into the DMM ecosystem as an affiliate member. Qori Capital will be in charge of introducing machinery, real estate, and vehicles into the ecosystem. We believe that this is an integral part of decentralizing the protocol, which will move more control to the DMM DAO in the aspect of asset introduction.
Overview of Qori Capital:
Qori Capital, a financial management company that ran the largest fund in Peru, has applied to become an affiliate member of DeFi Money Market (DMM). Qori capital is a Peruvian private debt fund created as a result of the partnership between QORI Capital (“QORI”) and Grupo Coril, which has had years of experience in this field. The core investment team ran the largest fund in Peru and managed a combined $1B+ USD through different asset-backed direct debt operations. Given Qori Capital’s track record, we believe that they are a great test case for the first affiliate member and will provide for further diversification as a new non-US geography of assets in Peru. We believe Peru is an optimal test case, as Peru’s development strategy is based on an economy open to the world, with a high level of foreign trade as an instrument for economic development and an open investment system with a favorable legal framework for foreign investors. The overall economic climate in Peru has grown in the last decade and will continue to grow, which will provide the ecosystem with the ability to introduce enough assets as the protocol grows. Qori capital will play a vital role in further decentralizing the ecosystem, by shifting the DMM Foundation’s role in seeding the initial assets, to creating a more decentralized matrix where any member of the DAO can stake tokens to introduce assets into the ecosystem.
Principal & Affiliate Members in the DMM DAO:
In the DMM Ecosystem, asset introduction works in two ways: It is broken down by geography on the country level with certain requirements for DMG holdings to be a DMG Principal Member or DMG Affiliate Member who can introduce assets directly to the ecosystem. The main difference between principal and affiliate members is that principal members get more priority and receive a higher percent of the income production of the underlying assets — this is explained in more detail later. In order to become a principal or affiliate member, users must reserve a specific country block. Initially, the requirements to reserve a country block will be lower, but as the ecosystem grows the requirements will slowly increase. By owning a specific country block, principal and affiliate members have the right to introduce assets (provided you follow the framework and guidelines established by the DMM DAO). Principal and affiliate members will also be able to charge small to medium enterprises (SMEs) an origination fee to introduce assets into the DMM Ecosystem (DMME). The origination fees are set by the principal member and those who wish to onboard assets into the DMME — keep in mind, the DMM DAO is not involved in setting these fees. The origination fees are paid in DMG, with a portion burned, and are locked into a contract. Upon each payment from the servicer, these payments associated with the underlying assets are then automatically released to principal or affiliate members. Initially, principal members receive 0.5% derived from the income production of the underlying assets, while affiliates receive 0.25% derived income payment production. Inherently, 0.75% is garnered as a benefit in addition to origination or other fees. These amounts are paid in the DMG governance token. We believe that as larger institutions move into the DMME, these country blocks will increase significantly in value. In essence, as more assets are introduced into each country block the percentage allocated to principal & affiliate members will increase and the total cost of reserving a block will also increase. Following the introduction of Qori capital as an affiliate member, members of the DMM DAO will also be able to reserve their own country blocks in the not so distant future.
Qori Capital’s role as an Affiliate Member:
By becoming the first affiliate member in the DMM DAO, Qori capital will be tasked with onboarding $20,000,000 worth of assets, which will be composed of real estate, machinery, and vehicles into the DMME. These assets will be made verifiable on-chain by uploading a hash of the IPFS hosted documents and/or by utilizing an asset-verification scheme where Chainlink oracles attest to asset ownership. Qori Capital will be charged with paying 8.25% to the DMM DAO, with 6.25% going to the mToken holders and the overage being sent to a reserve smart contract. The funds in the reserve contract can be called upon by the DMM DAO to induce a token burn, further lowering the finite supply of DMG. In order to streamline the transparency, the total value locked in the reserved contracts and tokens staked by principal or affiliate members will be viewable on our Explorer page upon launch. Since the DMME is still in its infancy, there will initially be no volume of asset introduction qualifications for those who are principal or affiliate members, to jumpstart the ecosystem. However, as the ecosystem grows, guidelines will be set out with the main purpose being that no member is able to “stall a market” by never introducing assets in a meaningful way. By becoming the first affiliate member, Qori capital will lock up ~300,000 DMG tokens at the current market price, which will be purchased on the open market. Inherently, these DMG tokens will be taken out of the circulating supply and will be used to mint a non-fungible token (NFT) that represents the underlying country block.
NFTs in the DMM Ecosystem:
As the number of principal and affiliate members grows, we envision a market will develop for the trading of these blocks. This will be done by creating NFTs for each country block and principal or affiliate status. For an NFT to be minted, the user who reserved the country block will have to lock their DMG in the DMM DAO reserve smart contract, which will remove the corresponding amount of DMG from the circulating supply. Since NFTs conform to the ERC-721 standard, they can’t be traded on ordinary DEXs or CEXs (decentralized or centralized exchanges), so, we hope to seed a marketplace where these NFTs can be traded between DMG holders, block holders, financial institutions, governments, or anyone who has interest in developing the DMME globally or in their specific country. This same process will be used for other countries. In essence, similar to a franchise, they are purchasing the rights to introduce assets into the DMME, further diminishing the availability of DMG. We envision a future where country blocks are treated similarly to franchises and can be easily traded on open exchanges. We plan on bootstrapping this process by allowing users to reserve their own country blocks in the not so distant future.
Why are these developments so important?
At a large scale these country blocks will have substantial, beneficial implications for the ecosystem and the underlying availability of DMG. Not only will the tokens used to reserved country blocks be taken out of the circulating supply, but, also, the excess revenue and origination fee from these blocks will be used to burn DMG. In turn, this contributes to DMG’s inherent deflationary nature and reduces the total finite supply. Already, we have seen this happen at small scale (with our last burn of ~72,785.56 DMG tokens). However, as the ecosystem garners more growth, the impact of these burns will be much more frequent and larger.
Overall, this is an important step in growing the DMME. We hope that these developments will help further the decentralization of the protocol, as the DMM DAO takes an ever greater role. It is with optimism that the DMM DAO aims to create an ecosystem that is free from fiat debasement, backed by real world assets that are represented on chain, which provides consistent and stable yield, and makes finance inclusive to all with the only requirement being an internet connection!