Proposal for the Deployment of EntroFi Vault

Summary

This proposal seeks approval to extend USX facility to EntroFi, serving the purpose of providing liquidity to crypto trading firms, with dForce’s representative entity or appointed entity acting as fund custodian.

Background:

EntroFi is an innovative protocol designed to drastically expand the potential of DeFi liquidity by channeling them directly toward ownership of real-world assets (RWAs) or infrastructures. Its mission is to create a next-gen financial ecosystem where capitals as well as assets transfer freely between on-chain and off-chain with maximum efficiency and minimum hustle.

EntroFi created a post on dForce Forum, seeking USX liquidity from dForce for whitelisted crypto trading firms with stringent risk management as well as proven trading records. The vault will cater to conservative trading strategies featuring stable return and low daily drawdown.

After careful evaluation, we’d like to bring this forward for DF holders to jointly decide. Below are proposed terms for the EntroFi RWA Vault, where USX can be minted to provide liquidity for whitelisted trading firms, with funds in full custody by dForce representatives or its appointed entities.

• Originator & Borrower: EntroFi
• USX Limits: 5,000,000
• Type: Revolving facility – interest will be charged upon utilization only
• Term: 6-month with 6-month roll-over
• Origination Fee: 1% one-off on drawdown facility deducted and paid to EntroFi (the Originator)
• Interest: 3%
• Use of Fund: EntroFi to allocate funds to whitelisted crypto trading firms for facilitating trading under the mandate
• Fund Custody: The funds together with capital borrowed from dForce (senior tranche) shall be maintained at trading accounts controlled by dForce’s representatives or its appointed entities.
• Collateral Ratio: Total fund under the trading account shall maintain a Collateral Cover of 1.3x (funds at custody account / funds borrowed from dForce) at drawdown.
• Maintenance Ratio: Total fund under the trading account shall at all times maintain a Collateral Cover of 1.2x, otherwise the borrower shall top up more collateral to the custody account or repay part of the USX loan to bring the Collateral Cover back to 1.2x.
• Drawdown Limits: Daily drawdown shall be less than 1%, in the event of breaching the limit, the trading counterparty shall seek written consent from dForce’s representatives for continuing the operation.
• Liquidation Event: In the event that 1) daily drawdown exceeds the max drawdown limit, custodian has the obligation to withdraw the fund; 2) when the account drops below the maintenance ratio, the custodian has the obligation to withdraw the fund and repay the loan.
• Repayment Mechanism: Repayment will be due upon maturity.

Proposal

• Seek approval for 5,000,000 USX facility from dForce with terms above.
• The RWA Vault will be deployed on EntroFi’s portal.