- For this weekly MIPs update, we had the formal submission period for the March governance cycle ending on Wednesday, March 3rd. There were a total of 21 proposals formally submitted of 32 that were eligible. This included MIPs expanding from Technical, General Process, Core Unit Proposals, and Amendments. On Thursday, all 21 proposals were confirmed by LongForWisdom to proceed to the inclusion poll stage on Monday, March 8th.
- The proposals were bundled into specific areas because 21 inclusion polls are a lot to vote on. We had them broken down into the Keg bundle, which covers the streaming payments using the Keg. Then there is the Core Unit Framework highlighting the entire framework for the Core Unit detailing the facilitator framework, the budget framework, the DAO primitives, and two amendments. If this framework is approved, the amendments will occur to the previous rules defined in MIP 16 and MIP 0. Initially, we had two technical proposals. One was the Term Lending Module, and of course, we had Liquidations 2.0 and General Proposals. We had Parameter Proposal Groups and the MakerDAO Multisig Wallet Management. Lastly, the 3 Core Unit MIPs for Real-World Onboarding, Risk Core Onboarding, and the Governance Team Onboarding.
- This week, we had those 21 proposals voted on in inclusion polls. All the proposals have successfully passed. Today, we’re going to have LongForWisdom confirm that all the proposals are eligible for the monthly MIPs governance poll on Monday, March 15th.
- In terms of other updates, the March community green light polls will go out following Monday, March 15th. I’ll show which greenlights polls that’ll be after the newly submitted proposal review. We had three core units get proposed and are now in RFC. Additionally, we had a declaration of intent put forward for EURO-DAI. The previous one had been worked on and iterated on by Andrew Burban and co. Lastly, an official MIP zero amendment is being worked on as well by the Governance Domain Team. The proposals that are eligible for community green lights are ETH, 2 Curve LP tokens, 2 AAVE tokens, sUSD, SNX, sSUSHI, SolarX, and SD-BFDC. Ten in total will be put forward on Monday, don’t forget to vote once those go out. That sums up my presentation for today.
- LongForWisdom: Perfect, thank you, Charles. I want to confirm that the inclusion polls were successful. They will be in next week’s MIPs bundle poll. Any other questions about MIPs?
- Charles: It looks like Eli had something to add concerning how there are also MIP 9 amendments put forward to RFC recently.
- LongForWisdom: There’s definitely a lot of stuff in RFC at this point. Does anyone want to start a discussion on anything specific?
- Amy: Do we want to talk about the governance process?
- LongForWisdom: That was in the sidebar. We could discuss that briefly. The questions concern whether we should do any governance action regarding the optimism DAI bridge. Maybe Sam could chime in on that?
- SamM: What I said in the post is that we could run a declaration of intent for the fast withdrawal piece, but due to the time constraints, we need to get this online quickly after Optimism goes up. Because it’s a permissionless system and we were to not offer this as an official bridge, somebody can take over and become the official DAI on Optimism. I wouldn’t oppose running a signal request of an urgent poll to decide whether or not we should go forward with this.
- LongForWisdom: We’re expecting Optimism towards the end of the month, right?
- SamM: Yes, that’s what they said.
- LongForWisdom: We can put the poll up next week on Monday to confirm the direction. Anyone else thinks we should be doing more in terms of governance?
- Brian: It was brushed over very quickly, but there will be a multisig on Optimism controlling governance of that DAI token in the interim. There will be some authorizations to change parameters and things like that. There may be more to discuss concerning who will be in control of that multisig and how long.
- LongForWisdom: Yes, that’s a good point. Have you thought about who would be key holders for that?
- SamM: That’s something that we need to work out.
- Nik: Would people be against having the mandated actors that are not a part of the foundation be the signatories on the multisig? Is anyone immediately against that?
- LongForWisdom: As one of the key holders, I’m not thrilled, but that’s fine. We’re the default option. That’s something we could discuss offline and incorporate into the poll.
- SamM: Kurt, you’re correct. We will definitely want to give governance control. It’s not trivial to forward the executive intent up into L2. Even in the medium term, we want to ship that over to governance.
- LongForWisdom: Technically, does that need to be a multisig that’s set up on Optimism?
- SamM: Yes, teams are working on it right now, building a multisig using Gnosis. This is a problem that almost every team in the ecosystem has right now, so it’s being worked on.
- LongForWisdom: Any other questions or comments on the Optimism DAI bridge?
- Frank Cruz: Is this something that has to happen for every bridge?
- SamM: What do you mean? Which component has to happen for every bridge?
- Frank Cruz: The multisig.
- SamM: It doesn’t have to happen. It has to happen if we want administrative controls on things. The bridge is a version 1 because we’re rushing it out there. We are absolutely going to upgrade it as we wrap our heads around the ecosystem. To facilitate that bridge upgrade, we do need some administrative control. Otherwise, it’s just set in stone.
- Kurt: I think the distinction here is not between having a multisig or no control. Instead, it is whether there is a multisig or control somehow given to the smart governance contracts. It’s going to depend on a bridge-to-bridge basis and the extent to which bridge technology has developed. Since it’s the first one, there are challenges to doing direct chief control immediately. In the long term, assuming we want governance to influence all the DAI bridges, we will need to start out with a multisig. We may also be able to start directly with the chief being in control. It depends on how the technology develops.
- Brian: Right now, if you want to transfer your DAI to xDAI, it goes through a bridge that’s controlled by the xDAI foundation, and it becomes the native token on that network. If you want to transfer to Binance Smart Chain, Binance will wrap that token and give you a receipt. Those are DAI placeholders that are out of our control on those other networks. We would receive full control of the DAI on Optimism. We want that because the bridge will need to mint DAI as it gets passed through. Still, we will also want authorizations to give the mint authority to a new system. Right now on mainnet, the only thing that can mint DAI is the DAI join adaptor Governance can’t even mint DAI if they want to. On liquidations 2.0, we will have the ability to have multiple ways to mint DAI. One of those ways being the bridge.
- Frank Cruz: Does that mean that Binance could technically mint a synthetic DAI?
- Brian: They already do. I think there were over 50 million DAI in Binance Smart Chain already wrapped into a wrapped Binance DAI.
- Frank Cruz: I meant a synthetic of a synthetic. If that makes sense.
- LongForWisdom: You’re asking if they can mint DAI that isn’t backed, right?
- Kurt: In that case, it’s not DAI. Somebody can create a system that makes a synthetic that’s pegged to DAI.
- Brian: That would only affect the DAI on Binance Smart Chain, though, so they can mint all they want. You’d be responsible for auditing the amount of DAI in the wrapper contract that they have on Ethereum mainnet.
- Kurt: It really affects you if you’re a user of that synthetic DAI.
- LongForWisdom: It’s more of a problem if Binance passes it off as real DAI. I don’t believe they’re doing this now and don’t plan to do so.
- Kurt: Hopefully, that won’t be done.
- Payton Rose: In terms of risk on the layer 1 side, what exactly are we dealing with here?
- SamM: It’s entirely opt-in, and anybody could deploy a bridge. There’s no apparent risk to the Maker system. It’s pretty safe. This will go up one way or another, so it’s better if we get one that we could control and promote.
- Brian: There’s always smart control risk. There’s a risk that the DAI that goes in the L1 bridge component can get stuck there.
- Kurt: You can make a shortlist of the things that could go wrong when you’re locking DAI in a contract like this. We need to do our due diligence and testing.
- SamM: The fast withdrawal component is a risk that we need to analyze for the system since it’s a new collateral type.
- Kurt: It’s worth noting that we can enable a bridge without enabling the fast withdrawal. Risks discovered to make that unattractive. It’s essential to make that distinction. We could have the bridge with its particular risks with or without the risks of fast withdrawal.
- Brian: If the liquidations 2.0 portion of it having the ability to mint a token called DAI was somehow subverted, you could theoretically mint any number of it. The message passing has to be tight.
- Kurt: It wouldn’t translate back to L1. That’s not a risk to L1 or the main system. It’s a risk to users of the L2 or things relying on that wrapped L2 token. There are risks on the L2 side for people transacting there as well. However, those don’t translate back into L1 risks.
- LongForWisdom: I would say the risks are more reputational than technical.
- Derek: I was looking at multichain the other day. If you have a look at the tokens there, you could imagine a scenario where Optimism launches. Sam’s point around a permissionless nature of L2 means that you could end up with multiple versions of DAI or any other token on there. For a user experience, that could be quite challenging because if you choose the wrong one, you may not revert back to L1. It could be a loss of funds.
- LongForWisdom: That’s also just a nightmare for any integrations.
- Frank Cruz: This happens in the real world, right? The Bahamas dollar is a dollar, and US dollars get lost everywhere. If some of these people take the risk of minting DAI or taking DAI on Binance or any other layer 2 chains’ part life.
- Brian: It is a risk to the mainnet system if our L1 DAI gets locked up in contracts. If it gets sent to Binance Smart Chain and decides we’re not letting it out, that could be put pressure on the peg. Same if we have an L1 bridge that locks large amounts of DAI up, and our vault holders can’t repay their debt. That would require us to try to solve that and get more liquidity on the market.
- Frank Cruz: You’re right. I didn’t think about the peg. Speaking of the peg, I am wondering if Primoz is still around. Can he give us a little info about the Gauntlet report on Liquidations 2.0? Chris mentioned that the risk team is working with Gauntlet.
Gauntlet Report on Liquidations 2.0
- Primoz: Next week, we should publish an analysis of the proposed parameters. I was thinking of including my findings as well as Gauntlets’. Not sure if they want to come on a call and present their own findings. I can’t speak on their behalf, but so far, it looks good. They simulated different combinations of parameters. There are nine parameters possible for each vault type. We’re primarily concentrated on the price curve, how steep the price curve should be, as well as the pros or cons if we were to make it steeper or flatter, and when auctions clear. We want to know if they are moving too fast or too slow? We have similar results in some ranges of parameters, which is good. However, we’re still optimizing the best combination of parameters. I can not make a whole presentation right now on their behalf.
- Frank Cruz: Thank you, Primoz.
- LongForWisdom: You mentioned nine different parameters for each vault type, increasing complexity over the current system. I’m interested in whether or not there is there any way of making that less complex for governance when they have to deal with it? Do you expect those nine parameters to be different for every vault type?
- Primoz: I’ve been thinking about this one a lot. We’ll make few vault types with a high collateralization ratio than others with a lower one. This is associated with the assets’ volatility. The more volatile the asset is, the higher the liquidation ratio. This also affects the price curve and the buffer.
- LongForWisdom: In terms of price curves, is there any number of mathematical functions that you could use as a price curve? How stable should we expect that to be?
- Primoz: It’s going to be an exponential price curve, not linear. You’re starting above the OSM price with the buffer. In the early phases of the auction, you may want the price to fall faster, so that’s why the exponential curve makes more sense. The difference is the slope.
- LongForWisdom: Thank you for that.
- Primoz: I’m planning to write the complete analysis soon. Hopefully, it won’t be too complicated.
- Tanner Allar: Another thing worth mentioning that the complexity, in general, is going to increase over the long term. We’re exploring decisions. You can call it computerized governance to better understand the system’s state and the effects of policy changes and proposals.
- LongForWisdom: Okay, that sounds intriguing.
- Nik: The ABDK audit was thorough. Relative to what the foundation has usually paid for other audits, it’s a very good value. I wanted to reach out to them to see if we could reach an agreement in terms of retaining them. Every month, they commit a certain amount of hours to do auditing work for us. It’s a consistent form of income for them, and it’s a guaranteed slot where we could get auditing work done. Getting auditors is a process that could take many, many months if you want good ones. People frequently will do this trade-off when they can’t get the good ones quickly, and they’ll go with a not-so-good one because they’re available. I want to formalize this into a signal request. I would like to go ahead and have that conversation with them.
- Brian: The audit came back, and it was very comprehensive. I was very happy with what they produced for us.
- Amy Jung: Are you guys thinking that it would fall under a core unit budget, or would we pay directly from the protocol?
- Nik: I was not thinking about it from a core unit perspective, but maybe that is the right way to do this. I want to lock these guys in before they get popular.
- Kurt: There are a few options there. It could come out of a combination of the smart contracts and oracle teams’ budgets because they would both make use of them.
- LongForWisdom: I think expecting them to fill out the core unit sub proposals to start with is a big ask. Perhaps we want to set them up with a retainer agreement for the first few months, and then if they’re going to formalize that further, we could bring them in.
- Nik: I’ll approach them with that idea. If there’s a warm response from their side, I’ll put out a signal request on the forum.
- LongForWisdom: That sounds fine.
Common Abbreviated Terms
CR: Collateralization Ratio
DC: Debt Ceiling
ES: Emergency Shutdown
SF: Stability Fee
DSR: Dai Savings Rate
MIP: Maker Improvement Proposal
OSM: Oracle Security Module
LR: Liquidation Ratio
RWA: Real-World Asset
- Artem Gordon produced this summary.
- David Utrobin produced this summary.
- Denis Mitchell produced this summary.
- Gala Guillen produced this summary.
- Sai Teja produced this summary.
- Everyone who spoke and presented on the call, listed in the headers.