Charles St. Louis
March Governance Cycle Review
- I will do the March Governance Cycle Review from the Governance perspective. It was successful. In general, we passed everything we wanted to pass. We saw that the combined mixed bundled poll did not see a lot of participation, around 11000 to 12000 MKR. Still, some of the inclusion polls saw a lot of participation. The Term Lending Module had the most participation, which ended up getting to 95000 MKR. It’s more than what we usually see. A lot of the others hit around 30000 or more.
- We see that participation happens for specific things that people want, which you would expect, and vice versa. It’s difficult to draw conclusions from that. It’s interesting how it varies over the different Inclusion polls in the various stages.
- LongforWisdom: This is the chance to discuss last month’s Governance cycle or next month’s Governance cycle. Does anyone have any comments?
- SamM: I’ve noticed that it got close to the expiry date of this month’s monthly executive spell. For those who don’t know, in the monthly spell, there are four days before the spell will deactivate itself and can’t be passed anymore. We have a tight time frame with that. However, it passed this month. In the future, what if in these four days we have a whale who’s away or something like that. We can have circumstances of voter apathy and result a monthly executive to not pass. I’m concerned about the stage we are at, in relation to triple voting to get things through. It might be a bit conservative for how quickly we need to move. For example, if one of these monthly executives doesn’t go through, it would be bad. We would have to push back the Core Units forming by a month or two and be forced to rework some stuff. Of course, it could not pass for reasons that people don’t want it to pass. I’m worried more about the case where people are 100% voted for it to go through but come across a voter apathy issue. We may want to consider suspending the monthly MIPs ratification section going forward. We can’t do it right away but suspending that for the time being while we are in this rapid growth phase combined with this voter apathy phase is something to consider. Right now, we have an inclusion poll, a bundle poll, and we have an executive vote. That’s three-levels of things that need to go through. Most of them usually get near 100% approval, which is why I’m worried about shooting ourselves in the foot with this issue.
- CPSTL: I agree that it could result in some problems concerning the four-day-limit. Earlier this week, on the Governance domain call, we have spoken about potentially coming up with a new way to model the MIP3, aka the Governance Cycle, and make it more flexible for future approach. We could have an weekly open call on the Governance topics to chat about potential improvements to the Governance Cycle. Still, I want to hear people’s opinions on suspending it in the interim.
- LongForWisdom: echoing Sam’s points, really, especially with the relationship with the final executive and how that can sometimes suffer from voter apathy; We have weekly executives every Friday. Once a week is not the best we can do but pushing for greater frequency becomes risky in terms of participation and the amount of MKR on the
hat dropping. We’ve been aware that it is not ideal to have three in a 10-day-period or something of that number. In the past these things have came down to the wire. This cycle ended up being alright, but it’s been a lot more on edge in previous cycles. Yes, it may be something that we should consider adjusting. We have the set of three polls going on because we have the executive at the end. For example, the second bundle poll is there because we have the executive. The advantage is that if you decide that the executive isn’t needed, you get rid of the need for that second poll as well, which leaves you with just one. Most would agree this is probably better. The downside to losing the executive is that currently, the MIPs are hashed and stored on the blockchain in that spell, which is meant to be the immutable record of what MKR holders have voted for in case there’s confusion or contention later over what was agreed upon. To be honest, we hash a lot of things such as polls, and we hash the executives. There’s bever been a case where someone has said, “let’s go back and look at the hash and figure out what we have agreed on because I’m confused and don’t remember, or it was wrong”. It could be overkill at this stage, right? I don’t know. It’s a hefty cost to keep paying for something that has never happened yet.
- CPSTL: In addition to that, the Inclusion polls filter out the individual proposals, and then the Governance poll is the bundled poll where everyone agrees on these. Suppose you were to take out the executive, that allows the Domain Teams to take those proposals without the need of implementation, and then take them on a one-on-one basis. You could have bundled them in the future. In that case, they are a technical proposal that requires an on-chain action. The hashing aspect would only apply to the technical proposals and not the more process-oriented ones.
- LongForWisdom: Yes, as Charles said, we discussed this last week because Sam reached out to me as well. There’s a couple of ideas we have concerning how we could adjust things. I’m less keen on the idea of suspending it, and more leaning towards adjusting it because I think suspensions get weird. You suspend things and everyone gets used to it, and then it becomes the way you do things. Still, it’s less legitimate because it’s a temporary thing that was supposed to be a temporary change. There is also the complicating factor of the DssGov coming up as well, which slightly changes the monthly cycle requirements. We would want to build something that we know will work with that as well. We are going to think about it over the next few days. We are going to try and push a proposal out before April 7th, which could mean going into the May cycle to start implimenting in June. We will think about it a little bit next week, and we’ll maybe discuss it again during the next Governance Call.
- SamM: Chris brought up a good point. There are security considerations for these quick succession votes. The MKR on the
hat gets dangerously low during the monthly executives due to the rapid turnover.
- LongForWisdom: A couple of people are mentioning rapidity of things as well, and I want to avoid making the multi-cycle because we already have Governance processes that are faster if we really need to do things more quickly. Making the cycle shorter isn’t necessarily a good idea because we already have tools that manage the shorter turnaround. But I completely agree with the points you’ve made concerning security and the fact you have to write it three times is annoying.
- Brian McMichael: From a Smart Contracts’ perspective, we run these monthly polls through the pause proxy as well. There’s a chance for something to get slipped in there; it’s not completely safe. Just keep that in mind. We are not actually changing anything in the system. Maybe we don’t need to be running it through the pause proxy?
- LongForWisdom: Yes. This will also involve several hours of work for Smart Contracts, others, and for myself. We will consider it next week and potentially give an update in next week’s Governance call.
Other Presentations and Updates
MakerDAO Budget Simulator
- I just put back the MKR rates. I removed them to initiate any discussion. This is just a model. All the numbers are fake. If you want to play with it, go to the “file” and make a copy to modify the parameters. You can modify all those parameters that are in yellow and orange. There are two components. One, which is a budget; it’s we decide as a community that we want to make as expenses for the year. You can change the annual revenue. You can change the MKR price. We may want to have an alpha for annual revenues as expenses. Half of the expenses are used to give MKR tokens to people. It gives me good numbers to make some tests and see that all the collaterals are okay. We want the surplus buffer as the MKR outstanding target leverage ratio for understanding the target. The forecast of DAI for my scenario will be outstanding at the end of the year, which can also be changed. We can forecast that we want to have five billion at the end of the year in the budget. Still, the scenario of what we have in the budget is not a good element. What happens if DAI at the end of the period is not 5 billion but 10 billion? What if the price of the MKR token is not two thousand but four thousand?
- You can change the price of gas. I took all the sub proposals for core units. I took the budget in DAI, and removed the MKR one. For oracles, I put a random number in it. You also have a column on gas; I made those numbers up. Then you have the MKR that you want to allocate to people. The actual number is not important. If you want to spread the MKR token by the base expense, you can do it. You can change the MKR weight by whatever you want. It will automatically recompute the MKR that will be allocated to each core unit. Obviously, it also depends on this parameter. If you say that you don’t allocate 25 million but instead allocate 12 million, you allocated fewer MKR tokens to people. By manipulating this column and this cell here, you can get whatever you want in the MKR token. Hence, you have the percentage of the budget used for each core unit. The most interesting part is that you have the MakerDAO P/L statement. Revenues and expenses are defined here. In this case, it’s 34 million, and you get the net income as a combination of budget income and actual income. With the remaining net income, you will fill the surplus buffer. You try to achieve the target position, which is more or less the DAI at the end of the period multiplied by the target leverage ratio.
- You may want to lower the percentage for the DAI surplus buffer, and then you will get a different perspective. If there is still some income, it should be used to buy and burn MKR tokens. We start with almost 1 million MKR tokens. You issue some MKR tokens to the workforce, and you will buyback and burn some of them depending on other parameters. Then you get the end position for MKR tokens. I tried to get something that you can tune as much as you want and give you a perspective of what will happen. I know many people are concerned about having more than 1 million DAI. You can use a different scenario if you are above or below 1 million DAI. Are there any questions?
- LongForWisdom: A few people saying that it seems very cool and useful.
- Somebody: Seb, did you share that link in the chat?
- Juan: You can find it in the forum.
- LongForWisdom: Is there anything anyone would like to discuss before we end? I haven’t heard from Lucas from Centrifuge. With the progress we’re making on MIP22 and the Centrifuge assets, I hope they’re feeling better with how things are going now. We’ll leave it there. Thank you, everyone, for coming.
Links from Chat
Common Abbreviated Terms
CR: Collateralization Ratio
DC: Debt Ceiling
ES: Emergency Shutdown
GF: Governance Facilitator
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.