Becoming a MakerDAO delegate
Stablecoins are the biggest use case of blockchains. MakerDAO can take the lead in resiliency and decentralization.
You can delegate to our address at the MakerDAO governance portal.
Decentralized money offers the biggest market size for blockchain applications. The UST fiasco shows a high degree of resiliency is needed and that stablecoins are only as good as the collateral that backs them. MakerDAO is a market leader and our best shot at building a decentralized stablecoin.
We’ve followed MakerDAO almost since its inception and have seen the project grow and go through challenging periods. The market crash in 2020 and the adoption of the PSM were key moments that showed the resiliency of the system. Together with @teemulau, we hope to support the MakerDAO ecosystem, assist with daily issues, and form strategy around the long-term development of the protocol.
Opportunity
This is an exciting time for MakerDAO. The collapse of UST has highlighted the importance of a collateralized stablecoin – and despite the market taking a hit in the short term, this is definitely good for MakerDAO in the long run.
The stablecoin thesis has yet to play out at scale. Decentralized stablecoins will prove their utility in the upcoming years vs. centralized stablecoins as a need alternative CBDCs and regulated entities issuing a stablecoin.
This is why we want to focus on supporting MakerDAO to get to the next level.
Vision for MakerDAO
First, we view the future of DAI as increasingly B2B instead of B2C (which most crypto protocols are today). In the crypto context, this means DAO-to-DAO. Maker can become an underwriter for lenders who distribute DAI through their channels – we are seeing the first steps of this with the Aave, Compound TrueFi, and Maple D3M modules.
On-chain credit markets are close to nonexistent in DeFi and Maker has a huge opportunity to grow here. One of Maker’s core competencies is risk analysis which is the key component for B2B Dai growth.
Another large challenge to MKR is the lack of excitement and engagement from outside of the Maker community towards the project. As an example, stkMKR proposed by monet-supply would bring a more enticing token economic model with arguably no downside to the project. Even if this is not the priority today, it’s clear that an update is required and would improve the system. A buy-and-burn mechanism is good — especially when prices are low leading to more MKR being burned — but stkMKR would offer better reward targeting, security, and potentially a stronger narrative.
The third reason we are doing this is that Maker governance needs more active delegates with enough weight to have an impact on the overall results and to drive new initiatives that don’t necessarily originate from Maker core team members. Voter apathy is a huge issue. At one of the governance meetings, it was reported that 2 entities had 90% of the active voting power.
Hasu has (correctly) pointed out that MakerDAO suffers from the principal-agent problem. Core Units aren’t always aligned with the interests of MKR holders. Their activities are mostly hidden from MKR holders. Establishing trust between MKR holders and the Core Units is key going forward. The Core Units are often doing a great job but even then, MKR holders aren’t finding out about it.
The relationship between MKR holders and Core Units shouldn’t be adversarial – in fact, it should be the opposite. There’s a growing sentiment of back-door politics running the show and delegates don’t have an incentive to challenge Core Units because they don’t want to make enemies.
We want to help get Maker ready for growth when the opportunity arises. This means scalable processes and using Maker’s inherent advantages to drive demand — such as low-interest rates to outcompete others.
Work to be done
In practice, this means that our focus will be on a few different topics in the short term:
Working on a fundraising proposal that does not dilute MKR holders (via debt financing).
Join Voter Committee discussions to figure out a path forward on how the DAO’s decision-making can be improved.
Research into task prioritization and improving the efficiency of adding new D3M modules.
Engage crypto holders outside the current Maker community – i.e. with a token economics change.
We’ll be connecting with ecosystem participants to work on all of these.
More information
We will soon start the process of becoming recognized delegates.
