MNGO as colateral for a loan

This grant request is to develop the system for MNGO holders to request loans using their MNGO as collateral.

This system will show that the MNGO pledged as a collateral is locked for the duration of the loan, but will give back to the MNGO holder the voting rights of the pledged tokens.

The reasons to develop this system are:

  • It may an interesting way to lock MNGO and send a signal to the markets

  • And at the same time will give the MNGO holders access to money for their required expenses without having to liquidate their MNGO

If the Multicoin proposal about locking MNGO happens, this system will give the holders the best of all worlds, they will have the multiplicator of the multicoin proposal and they will have access to the value of their MNGO.

Things to consider:

  • Liquidity: most probably we will be able to secure an interesting amount of FIAT to solve the short and medium term needs of all the MNGO developers
  • Cost of the loans: we will aim for fixed rates in the range of single digits APY
  • Liquidation of the collateral: If the borrower of the loan does not pay, his MNGO will be liquidated, we will aim to have a high maximum LTV
  • Exit strategy: maybe Celsius, Blockfi, Nexo or other crypto-lender will see what we are doing and take MNGO as collaeral too, then we can migrate the loans to them and close this shop.
  • Other benefits for the community: Maybe we can also accept tokens of other open sourced solana projects as collateral for the loans.

Benefits for Mango:
Independently of having other ways to lock MNGO (voluntarily, mandatory or incentivized), which will also send signal to the markets and possibly impact the price positively, having a loan on locked MNGO most probably will help the developers and having happy developers is the key objective.

I don’t know the size of the grant, what I know is the basic set of things the smart contract will need to do to manage this kind of loans:

  • Receive the MNGO and exchange it for USDC (I hope in the future we can change this to Dai)
  • Lock the MNGO for the duration of the loan, taking in consideration the amortization table of the same loan and releasing the MNGO as the loan is being paid.
  • Show the total MNGO locked in an easy to read way
  • Give back to the borrower the rights to vote of his MNGO
  • Be flexible enough to transfer the loans to better solutions that may appear in the future but being careful of anything that may be regarded as an early liquidation that may unlock the MNGO tokens before originally stated and send a bad signal to the markets.
  • Be compatible with the Multicoin proposal.
  • Maybe to be compatible with other projects tokens.

I leave the idea here and wait for your comments / contributions.

1 Like