[Agenda/Discussion] Scientific Governance and Risk #164 - Thursday, October 21 17:00 UTC

Agenda

The zoom waiting room will be on, and a password is set to: 748478, please ping us in the #governance-and-risk chat if you aren’t let in from the waiting room. This Agenda will be updated over the following week leading up to the call as people make me aware they want segments.

2021-10-21T17:00:00Z

Introduction

Governance Round-Up

Selected Updates / Discussions

This week we’ll be discussing delegate compensation, a topic of some discussion over the past week. Here are a few threads for background reading:

Other Discussions and General Q&A

  • (Time permitting, after general Q&A) - Nothing specific planned.

An anonymous Question Box is now available! Leave your question here and we’ll do our best to address it. Comments on the new meeting structure are welcomed and encouraged!

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G&R #164 Snippet

This snippet includes Governance, MIPs, forum updates, and Core Unit team discussions from the MakerDAO Governance and Risk Call #164.

General Updates

Votes

Executive:

  • October 8th: Offboarding Vaults, MKR Vesting, and Core Unit Budget Distribution - Passed & Executed
  • There will NOT be an executive proposal up for vote tomorrow.
    • Only one polled item ready for action
    • Much of the Exec team traveling to Lisbon

Polls:

  • 4 Weekly Polls Passed
    • Add stETH (Lido Staked ETH) as a new Vault Type
    • Nexo Institutional Vault Onboarding
    • Add the Aave Direct Deposit DAI Module (D3M)
    • Increase the GUNIV3DAIUSDC1-A Debt Ceiling
  • 1 Weekly Poll was Rejected
    • PaperImperium Supplemental Compensation
  • 6 Ratification Polls ongoing (end October 25)
  • 1 Greenlight Polls active (voting ends Mon. Oct. 18th)

MIPs

Weekly MIPs Update #58

  • Ratification Polls for October’s Governance Cycle are now running their second week.

Forum at a Glance

Forum at a Glance: October 14th - October 21st

Team-led Discussions

Delegate Compensation

  • Delegates put in many hours of work and high effort, which should be fairly compensated.
  • Need to find a balance between an attractive cash compensation but also MKR compensation.
  • Currently have unhappy Delegates and need to approach more professional and qualified Delegates from outside.
  • Need to move forward with this situation through step-by-step measures besides just signals.
  • Need to create a clear list of qualifications, KPIs, and “job” descriptions for Delegates.
    • Contrary opinion: Since the community picks their Delegates, qualifications for Delegates will naturally be selected and weeded out by MKR lenders and community voters.
  • Responsibilities should be documented for Delegate rolls because the Delegate role is not properly defined.
  • Delegation could be an idea for a Governance outreach Core Unit.
  • We may need to give Delegates a chance to find out what exactly their job is.
    • This is a unique situation that we cannot predict.
    • Need to allow some time of exploration to help develop the overview of a Delegate role.
    • Contrary opinion: this could become a huge mess that will be difficult to fix later. We need to clarify the essential responsibilities right now; what, when, why.
  • There’s uncertainty in the level of legal risk associated with Delegates.
  • Rune believes we are too focused on external issues and need to revert to the core of MakerDAO and delegation.
  • We need to spend more time discussing value in the DAO and delegation in general before focusing on Delegate responsibilities.
    • After that, we can begin to layer additional responsibilities for delegation.
  • Delegation was initially proposed to promote more MKR to be used for voting in Governance.
    • It worked, but now with just two or three Delegates, you can pass an entire executive.
    • Regarding Governance voting, we need to break down the problem, the goal, and the solution.
    • We also need to look into MKR tokenomics; MKR whales have no incentive to vote in Governance.
    • The time that a Delegate spends does not match the output that the Delegate can physically release.
  • GovAlpha has been in discussion with various VCs to incentivize them to delegate their MKR.
    • Issues they brought up: Not enough Delegates and no clear formal process.
    • Another way VCs can do this is to bring in their Delegates to Maker, which may hinder communication and transparency.
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Episode 164: October 21st, 2021

Agenda

  • 00:03: Introduction
  • 01:10: Votes and Polls
  • 02:53: MIPs Update
  • 05:40: Forum at a Glance
  • 10:58: Discussion - Delegate Compensation

Video

https://www.youtube.com/watch?v=TYD0X4zA6g4&t=2936s

Introduction

Agenda and Preamble

Payton Rose

00:03

  • Hello, welcome to the MakerDAO Scientific Governance & Risk Meeting #164 on Thursday, October 21st, 1700 UTC. My name is LongForWisdom, and I am one of the governance facilitators at MakerDAO.

General Updates

Votes

Payton Rose

Executive:

  • October 8th: Offboarding Vaults, MKR Vesting, and Core Unit Budget Distribution - Passed & Executed
  • There will NOT be an executive proposal up for vote tomorrow.
    • Only one polled item ready for action
    • Much of Exec team traveling to Lisbon

Polls:

  • 4 Weekly Polls Passed
    • Add stETH (Lido Staked ETH) as a new Vault Type
    • Nexo Institutional Vault Onboarding
    • Add the Aave Direct Deposit DAI Module (D3M)
    • Increase the GUNIV3DAIUSDC1-A Debt Ceiling
  • 1 Weekly Poll was Rejected
    • PaperImperium Supplemental Compensation
  • 6 Ratification Polls ongoing (end October 25th)
  • 1 Greenlight Polls active (voting ends Mon. Oct. 18th)

MIPs

Pablo

02:53

Weekly MIPs Update #58

  • Ratification Polls for October’s Governance Cycle are now running their second week.

Forum at a Glance

Artem Gordon

05:40

Forum at a Glance: October 14th - October 21st

Video

Team-led Discussions

Delegate Compensation

LongForWisdom

10:54

  • Delegates put in many hours of work and high effort, which should be fairly compensated.

Rune Christensen

  • Delegates workforce, empowered with resources. Disconnect MKR holders and CoreUnits, particularly budgets.
  • The voting situation is like voter apathy, and of course, delegates are away for voters to organize. I also think a significant factor and the personal element to it.
  • Difference between voters and a full-time professional delegate. They achieve the same political and systemic clout that the facilitators and the CoreUnits have right now.
  • Need to find a balance between an attractive cash compensation but also MKR compensation.
  • Unhappy delegates are not sustainable. We need to approach more professional and qualified Delegates from outside.
  • Need to move forward with this situation through step-by-step measures besides just signals.
  • Need to create a clear list of qualifications, KPIs, and “job” descriptions for Delegates.

Does anybody else have a perspective on the ownership?

18:49

  • Unknown speaker: My perspective is: if we’re going to have higher delegate compensation, we need to have a clear list of what the delegates are responsible for and make sure that they are qualified to take that on because, as it stands, it’s easier to be a delegate than a facilitator.
  • If we have competence on par, I would expect the delegates to be full-time and add value in ways that are qualified for their professional experience.
  • Today, you can be a well self-delegate to yourself.
  • There is no clear way to see the qualifications. The last time this was discussed on the forum, delegates worked ten to 15 hours a week. Do we want to pay them the same as a facilitator that’s working at least 40 hours?
    • LongForWisdom: It’s difficult to hire delegates because there isn’t a position you can hire for.
    • It’s a position that is elected by MKR holders directly as they move the MKR around.
    • I hope that once we start paying these rates, the people who are fitting in the part-time and don’t have good qualifications will gradually be replaced by the people that do. They’re more attractive to Maker holders as targets for delegation because they have the skills and the level of commitment.
    • I think it’s less important to define a strict list of requirements or a strict schedule or expectation. Because Maker holders should manage that themselves, right? As more delegates come on, like the high-quality ones to shoot a cream or Maker.

21:09

  • Juan: My concern is that it’s not clear what the delegates should be doing. It’s even hard for MKR holders to decide. I think any delegate can jump in and correct me, but there’s a huge work that the delegates are doing that could be potentially outsourced to a core unit that depends directly on the delegates, right? And this core unit will do what is, in the corporate world, it’s called ML, which is monitoring, evaluation, evaluating, and learning. It’s like an advisory core unit that could potentially talk to different core units, ask for reports, ask what they’re doing with the budget, what they’re doing with initiatives, and keep them accountable. I have been thinking about improving Governance; these workers are more neutral and work directly for the delegates to work more on steering the vision. According to the MKR holders, I’m not so much into doing the quote-unquote, dirty work of actually changing the core units to make sure that the quality is there.

22:43

  • Katie: I think the issue that I have with this proposal is that the role of the delegate seems murky to me and I’ve seen people say that they’re the role of the delegate is to interface with external regulators. That’s not something that I would expect of a delegate, and if it is part of their like responsibility, I think that should be documented. And then there should be KPIs and stuff for a role like that. I agree that the delegate should be paid, but my issue is that the role isn’t defined at all; I think some of the components that people are talking about could easily be a core unit, for example, a government outreach coordinate. I think it could be beneficial.

23:55

  • Unknown: I agree with the points that Juan and Katie made. We need to take a step back and assess: why did we implement delegates first? To pass votes or have them act as executives going through every map, signal requests, and be an advisor and neutral party? And then, fully defined, what should be within like a DUX delegates responsibility? I think people like the work that Paper is doing. I think that’s far above more than what a delegate is defined to do. And that would be a CU type role or hybrid type role related to the DVC. You mentioned Runes; I don’t know if you want to talk about that or any ideas you had related to that.
  • I just wanted to address this. People are bringing up the question, and then we don’t know what delegates are for. I agree that we don’t know. Paper Imperium has done things as a delegate that were kind of unexpected. The lobbying government agencies perhaps could or should be coordinated. I think we have a chicken and egg problem here that we don’t know needs delegates just to get votes passed in a timely fashion. We don’t know what other responsibilities delegates should have. I don’t think we can know that until we give delegates a chance to find their job. Our organization is unique, and we don’t know what delegates will find they can do, and we cannot predict it. We need to allow exploration to happen, give them a chance to develop, invent their job, and then document it later into core units. We should let that experiment happen.
    • Niklas Kunkel: I want to push against that. I think you should segregate roles, and some things should be CoreUnits and others up to delegates, and just letting this delegate thing expand into a vacuum and absorb a bunch of stuff, it’s going to be hard to splice that out later. And I have this fear that that’s just going to turn into a mess. I would rather do the exact kind of polar opposite and just clearly define what a delegate does and does not do.
  • LongForWisdom: If my code is delegating to them, and they’re happy with doing these things, there’s nothing you can do, right?
  • You can try to convince Maker holders that it would be better in a career; that’s the sort of path to which I think Joshua was looking at, where you pull stuff out of the delegates, like role, and then move into something more structured.
  • If you start saying, okay, delegates can’t do this, but we also don’t have anybody else to do it right now, then they’re just going to do what they think is important.
    • Brian McMichael: The simple solution is to invest more money in them. Paper Imperium put up a poll to request some funds for legal representation. By being recognized delegate, you’re putting your name out there, you’re not an anon, and you do become the target. We were in a gray area here; it almost seems like we should be asking the delegates why they’re not doing this and what we can do to make them feel comfortable in the role. I think that without legal protection guarantees from the DAO to delegates, it might just be too risky for anybody at any number.
  • Unknown speaker: Looking at like some of the bigger DAOs like Luca Uniswap, they have delegates from all like the major top universities in the US, including Harvard Law School, and just taking a step back even further, I just don’t think it’s practical for the government to go after every single DAO at once in the US, and, we’re a larger protocol. Still, we’re not to the extent that Uniswap is even without a civil investigation going on. They’re still acting as delegates.

30:20

  • Niklas Kunkel: Where does the idea that delegates are somehow more exposed to legal risks than other members of the DAO come from? Is there anything in common law that would point to that?
  • Paper: The big fear is that anybody in the US that is looking to either file a claim against, say they think they are wrong by the DAO or think to some criminal activities taking place, they’re going to look at it and those who are not charitable, there’s the risk that they could determine that or assert that Maker DAO is a general partnership, whereby everybody has liability for everybody else’s actions. So that’s the crux of it is.

Niklas: Are delegates more exposed than a facilitator or any member of a core unit?

31:12

  • Paper: It has to do with identifiable odds; they would probably go after the VCs first, just because that’s where the money is.
    • Rune Christensen: We don’t have the expertise to discuss something like this. We’re talking about these specific things, but the real problem is that we don’t know the big picture.
    • We don’t even know what we want out of the delegates. And the reality is, we don’t know what we want or the delegates because we don’t know what we want out of anything.
    • We’re missing this overall big picture. And that’s one of the main points I’ve made in this whole clean money proposal: these concepts of the Ice Age, which is this idea that you have a defined environment where things don’t change, and you have what I call the world map.
    • So that the scope and the breadth of what’s being done in the bureaucracy. These things need to be considered holistically; they need to be connected.
    • Probably no role is more sort of, in that situation, that the delegate in that it’s just you, you really cannot define what the delegate is without defining what the other pieces are. And then how they’re supposed to interact, right?
    • That’s what delegates are supposed to do. They’re supposed to interact with the rest of the governance process on behalf of MKR holders, and then the question is how are we supposed to treat the rest of the governance process, and that is the central thing that we need to figure out. An overall theory of how we want all of this stuff to look, and I think that then the discussion we’re having now I think is I mean the kind of things that have been considered a lot of this stuff is incredibly useful right is incredibly important to exercise to go through these things
  • Rune Christensen: We don’t have the expertise to discuss something like this. We’re talking about these specific things, but the real problem is that we don’t know the big picture.
  • We don’t even know what we want out of the delegates. And the reality is, we don’t know what we want or the delegates because we don’t know what we want out of anything, right?
  • We’re missing this overall big picture. And that’s one of the main points I’ve made in this whole clean money proposal: these concepts of the Ice Age, which is this idea that you have a defined environment where things don’t change, and you what I call the world map, right? So that the scope and the breadth of what’s being done in the bureaucracy.
  • These things need to be considered holistically; they need to be connected.
  • Probably no role is more sort of, in that situation, that the delegate in that it’s just you, you really cannot define what the delegate is without defining what the other pieces are. And then how they’re supposed to interact, right? Because that’s what delegates are supposed to do.

34:31

  • Prose: It is important to discuss the greater role and what a delegate looks like, and traditional, like Companies, things we’re familiar with, so we can compare, see what aspects we like and want to take with us. What we’re saying with this, in terms of what a delegate is and what they’d have to do to get paid under, what we’re putting forward here is that they have to acquire some amount of delegated MKR. In theory, that could be coming from them. We don’t necessarily know if that’s the case or not. They have to do a call poster platform talk about what they stand for and their guiding principles as a delegate. Then they have to participate in votes and communicate how they participated and why they participated. From the governance side, we gain a lot from having recognized delegates in terms of consensus building and compromise and understanding why things don’t pass.
    • LongForWisdom: I’d like to emphasize that the requirements we’ve set out are the bare minimum that we would need delegates to do, right? Once we have that, then we can start layering.

Katie: You guys are saying that you have a list of responsibilities and expectations for a delegate.

37:58

  • LongForWisdom: They need to write a platform, host the meeting, and they need to show up and ask questions for an arrow.
  • They need to vote consistently, and they need to communicate why they’re voting consistently to get paid.
  • They’re paid depending on how much they’ve delegated as well. The way it’s set up is it increases logarithmically exponentially.
  • You get paid more; the first 10 Maker you get is worth more than the last 10, you get a delegated up to like 10,000, which is where the maximum comes in.
  • It’s not like we’re instantly paying people the full amount; we’re paying them. We want it to be front-loaded because it attracts people more and sort of covers for when they’re just getting started. They don’t have a lot of MKR delegated, which is why it’s exponential.

Rune Christensen: There’s something like this a cap on how many delegates will get paid, right?

39:11

  • LongForWisdom: We don’t currently have that. No, I think that if we get to that situation, we can deal with it. Right now, I’d be thrilled to have like, 10, 20, 30.
    • Katie: It seems like, from the conversation, the biggest issue people have is that there isn’t a scope of work for a delegate, but it sounds like you do have them. Let’s come to an understanding what’s the scope of work, nothing beyond that. Then it makes a lot more sense to me, but there’s been a lot of operational-type things that people have mentioned that would be a delegate’s responsibility. I think it’s crucial to develop a specific role of what the delegate is and what they’re responsible for.

40:30

  • Juan: The documentation or what Long mentioned is already there; it’s relatively simple. I think that we should focus on Americans is a really bad idea. So if someone wants to weigh in, we should focus on all the other elements that one mentioned that should be in place for this method to work and make sure that everything’s connecting properly.
    • Juan: The documentation or what Long mentioned is already there; it’s relatively simple. I think that we should focus; maybe it is a really bad idea if someone wants to weigh in, but we should focus on all the other elements that Rune mentioned that should be in place for this method to work and to make sure that everything’s connecting properly.
  • LongForWisdom: If there’s very little we can do to prevent MKR holders from delegating to delegates. Any list of requirements we set out is difficult to enforce. Let’s say you are paying a delegate, and then they stop fulfilling the requirements; how do you stop paying them? As long as we hold certain objects too strenuously, they’re going to keep delegating to them, like; they’re going to need to pass on votes to cancel whatever payment stream is going on. It’s difficult to define because it’s not up to the DAO where the delegated Maker goes; it’s up to the individual Maker holders. That’s my concern with trying to find some rigorous framework.

42:08

  • Rune Christensen: We can’t define the rules for being a delegate because we’ve become so used to this environment where there is no connection between MKR holders voting and Governance. In theory, it should be MKR holders in charge, and then they have the votes. And they say, this is what we’re looking for in delegates, and then delegates show up, and then they get delegated to. We have to find a way to bridge that gap. People just aren’t delegating right now.
    • MakerMan: My understanding is that we weren’t able to pass executives. And when I read from Long as you’re saying that they were going to have GovAlpha had to chase down VCs to vote, right? And so there was a real issue within Governance, that Maker wasn’t doing its job. And so, the delegation was proposed as a solution to that.
    • You want to do it, Maker, because what you want to do is punish the people who don’t participate and reward those who do. And the whole point is, is that you want the Maker that’s participating in performing. So basically, you kind of want to align the reward and punishment assignment incentives to make that happen.
    • And the idea of doing it with delegates, it’s kind of convoluted, and you look at the results that we have right now. We have two delegates that themselves can pretty much pass any green light. I’m saying it’s like Maker or Long, you know, the numbers on these things like 3000, to do this 10,000 to do this, right?
    • We got two guys with more than 10,000 that pretty much drop whatever they want through the polls, they can’t do executives, but together, two, maybe three, could do an executive, I don’t know.
    • When I look at the result, I don’t think we’re getting what we need. And when I think about being a delegate, man to look at the system and interact in the forums and deal with CPUs, you know, it’s very daunting timelines. And, and I can’t think about how to do that, in a way that just makes sense for me from a time perspective and achieving anything. And so it just becomes this whole messy proposition of like, what’s the actual goal? What’s the problem? Do you know what we’re trying to solve? And what’s the best way to do that, that aligns all the interests across the board, because if it’s just delegation is just about getting Maker to vote, let’s work on that, and you can utilize delegates as a voting performance engine, right? And figure out how to spread the Maker around because this idea that one person has 30,000 Maker, hey, you know, a VC has 3050 80,000 Maker, you know, that’s the reality of the tokenomics.
    • And the problem is that these people, these whales, basically aren’t performing and Governance. And when you look at the way the tokenomics are spread, it’s like, what 80% of the Maker is in the top 100 wallets, and then 15% is in the next 500. And then you’ve got 5% in the last 1000s. And so the idea here is you need to reach to these people; I have no clue how to reach these people, except to give them incentives to play in this governance game, and invest them and do something creative, right? And I want to write something on this and work on this, but help, my time is so hammered.
    • I’m talking to lawyers trying to figure out if I get a trunk lawmaker that I vote here, do I have legal liability, you know, I’m putting money and time into this in a way that I could just x by not being a delegate, and just work for some CPUs and still get and probably do get more done.
    • We should look at the problem. And rethink the goals. And we can use the tools that we have to come forward with something that maybe works better.
    • We don’t know what the problem is. And we don’t have a good approach towards measuring the goal achievement, applying solutions to do that, and seeing how it works. We just tried one, and it doesn’t look like it had its improved performance.
    • We have still had the staggered Maker ability, and delegates really can’t get it. I don’t see any way that I’m going to get up to 1000. Maker, I don’t know. I mean, who do I have to talk to. And there’s no place where people who want to delegate can interact with the delegates themselves and go. Hey, I want to. I’m chopping around, you know, maybe you can be my delegate. And it’s like, so all of this creates barriers and hazards and issues for everybody. And I don’t know how we get out of them. So thank you, guys.

48:56

  • Sebastien Derivaux: I agree with most of what MakerMan said. And I understand that let’s move. Besides the fact that delegates are here mainly to pass as a continuous, that was the initial problem. But when you are a delegate, just a supervisor, or someone with a remote funds organization, you have only one job to focus on one thing.
  • We’ll be addressing it repeatedly, trying to see what is most important and tell it, and it’s easy when you are in the organization to go down the rabbit hole to analyze the budget and everything. But I don’t think that’s too good of the delegates because that’s a full-time job.
  • I worked with Mark for more than a week now on how to use finance to put more strategic value instead of Maker because we are spending a lot of cash.
  • We don’t have a strategy for MakerDAO, so While you can go into the rabbit hole and see every line on the budget, but that’s not changing the movies in either. And what I learned as being a board member of many startups is that you just have one thing to focus on and repeat it repeatedly. Because if you do too much, you don’t get anything done. And so it’s, it’s why you should be remote as well. Because if you are full-time on a project, you will no longer see your world picture.

50:42

  • LongForWisdom: I will comment briefly on some of the initial issues that Makerman has mentioned. Those are important as well. In terms of making those points, we must address the problem of bypassing executives and getting more votes. When we have that problem, we turn to delegation because that is the lowest hanging fruit for fixing this problem. At some point, we will want to reach the 25% of Maker holders holding bonds. That number of people is comparably higher than the whales holding large amounts, which may benefit the delegation. The VCs all want delegation because it allows them not to vote every week. They do not like weekly voting as they are not close enough to vote informedly without spending time. That is where we tend to delegate. It should still work itself out because the VCs will want to set up the custody platforms to delegate. But now the problem is the lack of delegates. As Makerman said, there is not a great deal of them. As other people have mentioned, working on this problem starts with bringing more coders into the conversation, in a way, like three delegates. To do this in the most possibly decentralized way, we need more delegates than we currently have. The easiest and quickest way of trying to get more delegates is by paying them.
  • We can try to figure out a system of fancy tokenomics to bring about a solution. However, that would not solve the short-term problem of voter shortage. So, Nik commented on spending in the sidebar. We are talking about 744k Dai per year. If we are talking about ten delegates, that is roughly 1.44 million Dai. Right now, we are spending about 34 million on CUs. This spending is incredibly beneficial on the cost-benefit comparison. If we have this, we can gain so much. It is not that expensive relative to everything else we are doing. I do not understand why this is even a discussion; this is something that we need. I have showcased its importance.

53:55

Mark: Have you been in touch with any other prominent VCs that want delegation but have not yet been able to do so due to a lack of delegates? I would assume that most VCs will still delegate amongst themselves?

  • LongForWisdom: There is a couple of obstacles stopping the VCs from delegating currently. The main one is that the custody platforms need to integrate with the delegate contracts because the VCs will only interact with contracts through custody platforms. This interaction gives them an extra layer of defense against things breaking. Porter is here; you can answer this question.
    • Porter: No worries, you are doing a great job. I have enjoyed the conversation. Thank you, everyone. There are some technical difficulties behind it that we are currently working with our custodial platform to fix. We will resolve these difficulties within two weeks. I cannot speak to the other VCs, but we will publish what we did with the folks we work with. Hopefully, that will enable a bit more delegation in the future. That said, we are actively looking for delegates and delegating. We will have some announcements regarding that just for the group soon.

55:13

  • Mark: That is great to hear, Porter. I am not sure if you have contacted any VCs, but we should get some lists of larger holders or VCs to understand where they are in the process and why they are not delegated. This would be important. If the issue is just technical, we could see that coming soon. If it is due to the lack of delegates, that would be good to understand as well.
    • LongForWisdom: We have been in conversations with VCs about these topics for the last month. At one point, we were messaging them every week in trying to get them to vote. Everyone has a good understanding of the causes of our problems, which is why we proposed this awesome idea. However, I am not able to quote VCs on their problems and proposed solutions specifically. That is not how it works.

56:11

  • Mark: You do not need to say a specific VC. You could say, for example, that X amount of Maker has technical issues that they expect to resolve within X weeks or Y amount of Maker does not think there are enough delegates to delegate yet.
    • LongForWisdom: Although hard to tell because there are more coming and going, the three largest VCs firms all require this technicality. A few smaller ones have done it themselves and are willing to do it without custody platforms. But generally, that is not the case. Worrying about the available delegates is more on my side because the technical solutions are there. VCs are going to want to delegate to somebody in some form. Although not something I can confirm, but the VCs would instead delegate to recognize delegates. Part of our goal has been trying to convince other firms that it is in their best interest to spread their Maker across delegates they deem worthwhile as this increases decentralization and reduces the risk for the VC firms. There is less risk of anyone delegate going rogue and messing things up. However, if there are not enough recognized delegates, then they will dismiss you hire delegates directly. This will solve the problem of exposing executives but will not encourage those delegates to communicate with the community right beyond voting. This further communication is vital for transparency, accountability, and decentralization.

58:12

  • Rune Christensen: May I go into my presentation? It provides a lot of foundational perspectives that will help people think about all these different things. We have already gone an hour. Once I get started, I know there will be topics that people would like to discuss further. It is better to do this now rather than when everyone is exhausted.
    • LongForWisdom: We can make it the last call for people to comment on this topic.
    • Katie: I just wanted to say thanks for the discussion. This has been great. I appreciate it.

59:02

  • Someone: I want to point one thing out. We have always had the difficulty of not knowing why a vote does not pass. Now, you can put a comment in an executive. That is cool. But knowing why a vote did not pass would be worth a lot in helping steer the organization to a better way.
    • Rune Christensen: That is not a minor extra detail but the central question of the entire project. You pointed at the fundamental factor that decides whether Maker will succeed or fail. The governance process does not work if there is no connection between voting behavior and the changes, strategies, and feedback loop between the results and decisions. It is then just randomly deciding what gets passed on. Communication around the reasons for voting, the voting topic, and voting methods are fundamental.

1:00:31

  • MakerMan: I want to echo that. The way the executive works is that you vote yes for a particular executive. The idea that someone is voting “yes” on an older executive gives no new information. There is no “no” vote against them. This part of the process immediately leaves out information. Did the person who voted “yes” for the old executive not participate, or did they vote “no” against the current executive? The polling is a little different. One of the key issues is that we are trying to get information in a mechanism that cannot provide the information on who voted “no” against executives. How do we get the feedback when the designed system mechanisms are incapable of giving us that feedback?

1:01:27

  • Rune Christensen: I want to do a little experiment. We just had this conversation about delegation with roughly ten people. I want to see how many people that came with inputs on the call spoke. How many are just regular MKR holders that are not part of the workforce? The workforce is anyone getting paid through core units, delegates who are not presently paid but expect a payment, or anyone with a special relationship with a protocol rather than just a regular account holder.

1:02:49

  • Rune Christensen: We see the disconnect in the same way. We just discussed delegation, but the entire framing of the discussion has not even considered the proper starting point. From the perspective of core units, the role of a delegate is to pass the executive votes that the core wants. To some extent, that is even harder than was discussed. While that is not how people view it, this is a rubber stamp to the votes. But ultimately, that is where the incentives lead us. We must think extremely carefully about the overall structure of Governance and especially the people’s incentives. Who is participating, and for what reason? A delegate that engages in discussion about delegate compensation aims to maximize their compensation. Their incentive is the fundamental thing. The objective is to create value for MKR holders, grow the Maker protocol, and create value for end-users. We must recognize the pieces that achieve these outcomes in creating and then defining this value. The lack of feedback loop between MKR holders voting, proposals passing, voting conversations, and targeted objectives has created a great contradiction for our community. I will be focusing on this fundamental question over the next couple of weeks and beyond. The overall theme is essentially the governance earthquake of periods of very constant change and evolution of how Governance works. How do we get to a stable equilibrium where things just run and everybody is happy with how the process works?

1:06:12

  • LongForWisdom: Before starting the presentation, may we get a quick time check on how long it would take? As you said, it is getting late for people. I want to make sure people are prepared before they dive into it.
    • Rune Christensen: I can do it in 20 minutes unless people want to discuss things on the way. I am getting into the spiciest elements of Maker governance. These are the big questions that some may not have even considered, and others may have considered the elephant in the room perhaps even afraid to discuss. There is a good chance the discussion would spiral out of control, so people should keep that in mind. I am willing to discuss this all evening.

1:07:09

  • LongForWisdom: Do you want to separate this from the governance call to end this recording and potentially start another one? Okay, so we will call this here, and then we will spin up another recording to be recorded separately. Thank you to everyone who showed up for this call. Appreciate everyone, and we will pause the recording here. This was amazing.
    • Pablo: Thank you, everyone, for joining.

Suggestion Box

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

RWF: Real-World Finance

SC: Smart Contracts

Liq: Liquidations

CU: Core Unit

Credits

  • Artem Gordon produced this summary.
  • Andrea Suarez produced this summary.
  • David Utrobin produced this summary.
  • Larry Wu produced this summary.
  • Everyone who spoke and presented on the call, listed in the headers.

This full call is now available for review on the MakerDAO Youtube channel:

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Is there a recording of the presentation that happened after the call? Thanks!

The presentation that followed is now posted on the MakerDAO Youtube channel:

1 Like

@JerryAG Isn’t this worth a separate forum post? Folks who missed yesterday’s meeting will have no idea that Rune presented.

1 Like