Rigor Protocol Development
Three Phases to Community Ownership
Our goal is to build and scale public financial infrastructure for construction finance. We’re executing an exciting, three-phased strategy that we’re delighted to share with our growing community.
We welcome and encourage your feedback — head over to our Discord and say hello!
Phase 1 (Sept 2021 — May 2022): Protocol v1 Development; Lending and Payments App MVP; Live Beta Commences
In November 2021, we released Rigor Protocol v1 along with the first MVP app to showcase how the protocol is intended to work IRL. The app features the U.S. residential construction use case. We chose this use case because it’s among the most urgent we can think of: the world needs more homes!
The beta has enabled iterative discovery of product-market fit with live customers lending and building the beta’s first wave of a dozen homes. This is ~$3m in committed lending volume. Average build cost is $250k. APYs have ranged from 8–10% as between lender and builder/borrower.
This initial dollar volume has bred a ton of task-level activity in the app (tasks are the budgeted work that builders itemize as part of their build plans, e.g. “Lay Foundation”) which has provided us with ample usage information across a variety of construction and lending activities.
This enables us to understand vital information about UI/UX (demo) and business utility across lenders, builders and their supply chains. We’re aiming to understand KPIs like ease of use, impact on cycle times and business processes. Build time is 6-8 months per home, so information is iterative and streaming in.
Lenders consist of crypto native institutions and private crypto lenders (our core lending use cases) as well as existing lenders/originators in the construction space. For lenders we are aiming to show how simple and transparent payment flows, secured with smart contracts, can earn reliable, fixed term yield.
Builders are SMB homebuilders who build 50–100 homes per year — this profile of homebuilder is approximately 75% of this $600b U.S. market (you can find more background about this market here.)
Strategically, we’re most excited that the beta has inaugurated a new digital asset — home construction loans. This asset’s details are both transparent and accountable, two attributes vital for creating lender confidence in this new asset class. The beta is showing that Rigor Protocol offers the components needed to align incentives, enforce terms of trade, and compel more lending into this vital asset class.
Phase 2 (June 2022 — July 2023): v2 Protocol Development, v2+ App Development, Beta Expansion
Rigor Protocol v2 will be a generalized and open source protocol for construction finance. It will continue to power Rigor’s live home construction finance app with more functionality while going further to introduce needed functionality applicable to more construction finance use cases. The protocol’s opportunity is to remedy construction finance choke points across the world’s $13 trillion global construction industry. (Big things!)
During the next twelve months, we plan to iteratively introduce new protocol capabilities and app features, test them in the live app while scaling product-market fit understanding across 100 homes (~$25m in liquidity / loan volume).
v2 expands protocol capabilities to fully embrace the composability opportunities that DeFi has to offer. We’re already engaged in the R&D to understand opportunities to enable sustainable DeFi-native yield composability of collateral like title, undeployed capital between lender and borrower governed by Rigor’s smart contracts, and other digital assets we want to make available to the protocol.
This could mean DeFi yield subsidies on undeployed capital between lender and borrower, which could bring down financing costs. We’ve also commissioned work to enable DAOs to seamlessly lend into this asset class, enabling pools of capital to coordinate builds on Rigor. We are excited to welcome high-conviction lending communities to Rigor. Green Homes DAO? Affordable Homes DAO? Build-Away-From-Flood-Plains DAO?
When completed, we plan to open-source v2’s code for software developers, lenders, and the broader community around the world.
Notably, we feel strongly that product-market fit is a requirement to inform protocol incentive design. Dan Robinson said this well:
We witnessed this as crypto investors ourselves (with founders eager to issue tokens replete with elaborate incentive justification, only to find that their hypotheses could have used some user feedback and data).
Phase 3 (June 2023+): Community ownership
Armed with a live, scaled use case and an open source protocol replete with developer tools, we are excited to execute a thoughtful, progressive decentralization strategy and, critically, to invite community ownership of Rigor’s financial infrastructure.
We have a unique opportunity to change this industry’s dynamics: by opening up lending into this new digital asset class, we can commoditize capital rather than commoditizing labor. We think that’s a powerful call to action for high-conviction digital asset lenders.
We’re passionate believers in community ownership and stewardship, and are excited to offer Rigor’s capabilities to a world in need of vital infrastructure. We envision ownership utility that will enable a range of functionality including governance participation, staking within the Rigor protocol — bedrock functionality that will underpin and enforce the protocol’s essential features. It will also help scale interoperability with other DeFi protocols, enabling, for example, the ability to secure construction loans against the protocol’s value. More on this as we diligence legal and technical requirements, of course.
Thanks for your interest. If you haven’t already, please join our community!
