Christensen under fire after MakerDAO members voted in favor of his reorganization plan
Rune Christensen won. But now the real competition begins.
That’s the result of a just-completed poll by MakerDAO members and the backlash over its impact on the DeFi community.
Members of the DeFi #1 protocol overwhelmingly voted for major changes to the project’s structure in line with the Endgame roadmap laid out in May by MakerDAO founder Christensen.
Bad suggestion
But the poll, poll #882, has come under fire from prominent voices in the Web3 industry who say only 15% of the MKR, Maker’s Governance Tokens, in circulation have been mobilized to vote. Additionally, the votes delegated by Christensen accounted for nearly three-quarters of the votes cast [Rune Christensen] single-handedly in the face of strong and valid criticism),” said Hasu, a MakerDAO governance delegate and strategy lead at Flashbots.
MakerDAO is poised to disintegrate into “MetaDAOs” in a historical upheaval
Maker members are voting on a new reorganization in a series of polls this week
Still, Christensen said turnout is one of the issues he highlighted months ago and is at the heart of the range of changes he is proposing. “Since the dissolution of the Maker Foundation, it’s clear that lack of voter turnout and open-ended governance complexities pose an existential risk for Makers and DAOs in general,” Christensen told The Defiant, using decentralized mechanisms like voter incentives to limit the limited and immutable scope of governance -Resolve complexity and replace untrackable black-box budgets with performance-based incentives like revenue sharing and other checks and balances.”
delegates
Sebastien Derivaux, asset-liability manager at MakerDAO, shared data showing that three-quarters of the votes were cast by delegates supported by Christensen.
“While 122 people voted, only one counts as it represents 63% of sales and 74% if we have an influence,” Derivaux tweeted. “It doesn’t have to be that way as MKR is quite decentralized in the holdings, just people don’t vote or delegate.”
This episode is just the latest focus in Maker’s efforts to balance its collaborative governance model with the need to generate revenue growth. At the same time, Maker and Christensen wrestle with the best way to address regulatory risk in the wake of tornado cash sanctions and the exposure of stablecoins to Washington’s enforcement actions.
MakerDAO is a collateralized debt protocol that allows users to mint its DAI stablecoin against collateralized assets. According to The Defiant Terminal, it is the largest DeFi protocol with a total value locked of $7.5 billion.
suite of proposals
On October 25th, the Endgame Prelaunch Maker Improvement Proposal Set passed with 80% support. The survey presented a set of proposals to radically overhaul the structure of MakerDAO in line with Christensen’s endgame thesis.
In Endgame, Christensen lamented that Maker’s decentralized leadership was failing due to voter apathy, competing factional interests, and the increasing complexity of MakerDAO’s operations. He called for the reorganization of Maker into a set of self-sustaining MetaDAOs that will autonomously develop their own business models and growth strategies and operate in parallel.
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Each MetaDAO will have its own tokens and voting committees, with tokens being issued through yield farming to incentivize participation in governance. The structure will also allow Makers to compartmentalize and manage risky activities such as lending in the real world by specifying the specific MetaDAOs.
MakerDAO will now launch six MetaDAO “clusters” tasked with developing the governance process for MetaDAOs. Maker will also create a “Protocol-Owned Vault” tasked with accumulating stETH and expand the scope of the project’s DAO-based governance to include issues related to MetaDAOs.
The proposals also transfer governance over collateral onboarding and offboarding from Maker’s existing governance structure to its Strategic Finance, Risk and CES core units.
real world assets
However, the vote was largely postponed on social media due to the small number of votes and Christensen’s influence over the delegates who attended.
“It’s really sick that a proposal that changes so dramatically…every part of the protocol can be passed with less than 15% of the vote,” Hasu said on Twitter. “If there had been at least a 50 percent quorum [Christensen] needs to lobby and convince other owners to push his proposal through… I hope other projects take what happened at MakerDAO as a lesson and develop a tiered governance system.”
Fortunafi CEO Nick Garcia agreed. “A prime example of the current desolate state [of] Protocol Governance,” he tweeted. “You can’t fix a governance layer like this. It just has to be built from scratch.”
Prime example of the current desolate state [of] Protocol Governance. You can’t fix a governance layer like this. It simply needs to be rebuilt from scratch.
Nick Garcia
The London Business School Blockchain Society was among the delegates who voted against the proposed sentence. “The number one issue we see with Maker right now is the lack of consensus on its overarching purpose/strategic purpose,” tweeted Park Y, a representative for the company. “Unfortunately, Endgame introduces new and complex governance features that don’t necessarily solve this core problem.”
The endgame plan also aims to create a roadmap for the future launch of Maker assets in the real world.
Regulatory Risk
Christensen’s original Endgame plan favored RWAs, arguing that MetaDAOs provide a more efficient structure for Makers to increase their exposure to real-world institutions and diversify their revenue streams.
After US Treasury sanctions against Tornado Cash Center caused 38 wallets containing USDC to be blacklisted, Christensen changed his mind and claimed that RWAs, including centralized stablecoins, could be a dangerous source of regulatory risk.
An updated version of the endgame plan argued that MakerDAO should limit its RWA exposure to no more than 25%. Christensen also said Maker will allow the DAI to float freely against the dollar within three years, which is dismissed by many in the web3 community.
“Giving up price stability to pursue RWA seems like a terrible compromise in our view,” argued Park Y. Maker’s core product is DAI, meaning price stability should be its primary goal. A float would cause a far more detrimental loss of confidence. “Assets, RWA, and not the extremities of either,” Park Y continued.
“Endgame is only bad if it resolves the actual DAI,” said Curve Finance, TVL’s top DEX.
Now comes the critical next stage in MakerDAO’s reorganization.
Negative target rate
With the passage of Poll #882, MakerDAO is expected to choose between three different strategies for managing its RWA engagement and DAI retention: Pigeon Stance, Eagle Stance, and Phoenix Stance.
Under Pigeon Stance, which believes the risk of regulation is low, Maker’s RWA exposure would not be capped and DAI’s peg to the dollar would be maintained for at least two and a half years.
Eagle Stance would result in DAI becoming free-floating after the same period, possibly along with a “negative target rate” intended to reduce demand for the token. Phoenix Stance would ban any RWA exposure “to ensure maximum protection from regulatory crackdowns.”
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