You may have heard of RWAs that consist of “revenue-based financing” — where a loan is granted, but the lender has a lien on receivables or even control of accounts where the borrower is paid.

What you may not have heard of is that this is an old practice, with some interesting variations. Let’s take a look at a *spiritual* revenue-based financing RWA (is it still a real-world asset if it’s spiritually collateralized?) that helped spark the Protestant Reformation and change the course of history.

The medieval Catholic Church found itself allowing indulgences — forgiveness for sins, so I guess less time in purgatory or better neighborhood in Hell when you die — to be granted in exchange for charitable donations. In theory, they weren’t supposed to be sold, and only given for virtuous acts.

However, one fellow wanted to be the Archbishop of Mainz (who also was one of the seven Electors in the Holy Roman Empire). This required a donation of 20,000 guilders to Rome — around $9-10m in today’s gold prices. How was Albrecht, the would-be Archbishop-Elector, going to come up with the scratch to assume this important office?

He did what people always do when financing a large purchase — he went to the bank. In this case, it ws the Fuggers, a family of bankers based in Austria.

Understandably, the Fuggers wanted to make sure they got paid back. And it’s not like they could repossess an archbishopric that belonged to the Church. What to do?

The answer came in revenue-based financing! Albrecht got permission from Pope Leo X to aggressively sell indulgences in his domains (he was already the Archbishop of Magdeburg). Before long, a priest was traveling around Albrecht’s domains with a piggy-bank-like chest for sinners to insert coins and receive a spiritual pardon.

To enforce their rights to the income from indulgences, the collection chest had three keys, all of which were required to open the chests and get the gold and silver coins out. One of the three keys was held by the Fuggers, and the chest accompanied by their watchful agents to ensure the revenue was used to repay the large loan.

Of course, this was seen as an abuse of Church power and was directly challenged by Martin Luther in his 95 Theses that sparked the Reformation and the onset of many religious wars within Europe.

But I do love weird, unique, and clever financial structures find their way onchain as RWAs. Maybe someday a religious organization will tokenize their future “donations receivable” and borrow on @WildcatFi or @Morpho and have those claims zipping around DEXs by eagle-eyed traders on @okutrade. Onchain finance can and definitely will be much weirder than traditional finance eventually.