[Agenda/Discussion] Scientific Governance and Risk - Thursday, June 4 9AM PST (4:00 PM UTC)


The zoom waiting room will be on, and a password is set to: 748478, please ping us in chat if you aren’t let in from the waiting room.


  • Richard Brown: General Q&A
  • LongForWisdom: Governance at a Glance



General Q&A

We’ll open the floor for any questions about Scientific Governance and Risk.

Please join us and help shape the future of the MakerDAO.


Call Summary

Will be provided here after the call as time allows.

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Submission Review - June

* Technically submitted after the submission window closed, due to authors forgetting to move the proposals to the #MIPs:fs category and failing to getting the proposals merged to the RFC branch of the MIPs repo before the window closed. This is in the process of being corrected, and I’m leaning towards letting the authors get away with it this once only due to lack of familiarity with the process.

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Episode 95: June 04th, 2020


  • 00:00: Intro with Rich Brown

  • 04:05: Governance at a Glance with LongForWisdom

  • 11:18: Weekly MIPs Update with Charles St. Louis

  • 15:55: MIPs Submission Review with LongForWisdom

  • 29:21: State of the Peg with Vishesh Choudry

  • 43:06: Open-ended Discussion




Agenda Summary and Talking Points



  • Welcome to the June 4th edition of the Scientific Governance and Risk meeting, my name is Richard Brown. I am the Interim Governance Facilitator. Today I am joined by LongForWisdom, who is the Governance facilitator. It’s going to be an interesting call, or not, I say that every time because of muscle memory.

  • We generally have a list of speakers scheduled for these calls. Occasionally, stars align, and we don’t have a group filling us in on a specific part of the ecosystem or a new initiative. Today we may have a quicker than usual call. I encourage people, implore or beg are maybe better words to use this time and resurrect some of the stale threads in these calls. One of the overarching issues in our protocol is there is no shortage of things to talk about. We’re rarely able to identify and pull apart all the threads that we need to, or at least for as long as we should. There is a log going on since we’re at the forefront of a brand new space; open source governance. Perhaps we’re just farther along than many, discovering things along the way, and other topics get pushed aside as new things arise.

  • What I would love is for everyone in the call to give some thoughts, questions, or ideas with regards to the protocol that haven’t gotten enough attention or may have been forgotten; Even just generalized questions about Governance and Risk. Take the first part of the call to come up with some questions, and we can see where that takes us. Or we could have an early end today.

  • Discussions happen in the Forum.



Governance at a Glance


Governance at a Glance

  • Goverance Parameters

    • @hexonaut created a temporary off-chain reference post for the settings of ‘meta-parameters’ to aid governance in understanding how our votes affect the actual system parameters.
  • Dai peg thread

    • @IslandHunting suggests some preemptive action to get ahead of the rate changes that would be required to keep DAI at peg as credit becomes more attractive.
  • SourceCred Trial Kickoff

    • @s_ben from SourceCred provides a kick-off post for the SourceCred trial and shares a preview of rewards based on the last week of May. We’ll be expecting a post similar to this each week going forward.
  • Governance Communications Team - Research Form

    • @twblack88 is looking for some input into the output of a communications team and puts out a call for new members.
Seeking Signal

Discussion 1


The PR Governance Team
  • Rich Brown: The PR team for Governance is a fascinating initiative. Normally the foundation or protocol trawls for talent, finds talent, then gives them funding. The subtext is that 99% of the time, it’s related to purely technical activities. There is some need for content, and that leaves a fairly significant hole in our ecosystem. One of those holes is “how does a DAO, a loose collective of people with a shared mission, how do they identify things they want to communicate, and how do they go about communicating them?” It sounds simple, but it’s not. It’s worth thinking about.

  • Rich Brown: We have the Foundation, with bright lines drawn around it, people in this call, people in chats, MKR voters, etc. There is a collection of circles in this gigantic Venn diagram. There are issues where the DAO needs to communicate externally. However, there isn’t a mechanism for community-directed messaging. The question is, “How do you do something like that?” How does a community of people arise determining voice, what the message are, what channels, how does it get feedback, etc. They’re all important questions. It’s something I personally believe we all desperately need. We need some framework where the community can get together and speak to the ecosystem at large with some unified voice or in some form of cohesion. If you have chops in areas that are frequently ignored like marketing, content generation, communication, project management, all these dark arts that I barely comprehend, we’re desperately looking for that talent.

    • Tim Black: That’s a perfect summary couldn’t have said it better myself. The form has gotten several good answers from active forum members, which is exciting. I’ll start broadcasting to other channels, but if you have any feedback about how you think a community should come out and talk to itself and the greater public and then pull in from the greater public to the DAO, that would be super helpful. I wanted to add that we’re trying to recruit more people. It gets easier to produce more communications when there are more people there. We do have a RocketChat going that’s semi-private, but it’s not exclusive. Normally we meet Thursdays but are flexible.

    • Rich: Thanks, Tim. TL;DR, the DAO needs a voice; the community needs a voice or a set of voices. So if you have that type of skill set, please reach out. It would be nice to facilitate non-development work for once. Back to the agenda, let’s move on to this week’s MIPs.


Charles St Louis

Weekly MIPs update


  • This month has been much busier than last month. Last month we saw a sub proposal go through the entire process successfully, which is a great way of testing the entire process.

  • The second governance cycle began on June 1st. The formal submission period for June’s governance cycle was from June 1st to June 3rd. This period is when MIPs and sub proposals are proposed to enter into the Governance cycle. Upon approval of the governance facilitators, the proposals are given a round of Inclusion Polls that begin during week 2.

  • This month we have nine proposals that have been proposed to get into the governance cycle:

    • MIP13 Declarations of Intent by LongForWisdom

    • MIP14 Protocol Dai Transfer by LongForWisdom

    • Four amendment MIPs are going to improve MIP6, MIP8, MIP9, and MIP12, for clarity and making the general collateral onboarding process more efficient.

    • There was also a sub proposal to introduce a Risk Domain team, proposed by Cyrus.

    • Two collateral onboarding proposals for KNC and ZRX

  • You can see all the proposals in this forum comment

Order of the day
  • Today the governance facilitators will review and decide if these proposals should be included in the inclusion polls next Monday. The inclusion polls will determine if they should proceed through the governance process and be put into governance polls in week 3.

  • Just to reiterate, the inclusion polls occur when MKR holders decide which things to bundle in the future governance polls. As I mentioned, there is a threshold to necessitate the attention of a governance poll, which is 3,000 MKR. So the yes votes have to be greater than the threshold and the no votes for it to be approved. Each poll will have a yes/no option. Once the polls end on Thursday before the Governance call next week, there will be a review of the results to decide which proposals have made it that far and proceed to next week’s Governance polls.

Collateral Onboarding
  • In terms of collateral onboarding, the executive vote passed for TUSD-A and USDC-B to be added to the Maker protocol, and once the pause has passed, I think 19:17 UTC they will officially be added to the Maker Protocol.
Community Greenlight Polls
  • Community Greenlight Polls are still in progress for the next four days. So don’t forget to vote on the collateral you’d like to see proceed. As a general reminder, these polls provide a reasonable approximation of what the community would like to see done, but it is not binding, and the domain teams still have the freedom to choose which collateral types they want to domain greenlight and compile their work.
End of MIPs Update
  • So that’s it for the MIPs update today. I will post another update in the MakerDAO forums highlighting everything I just said, and it’s open for discussion there, of course.

Governance Facilitators

MIP Submissions Review


  • The amendments to MIP6, MIP8, MIP9, and MIP12 all seem fine in terms of formatting and presentation.

  • I would encourage people to go through and read the proposals, and if you have a bit of time, look at the pull request to see what’s actually changing. In general, these are intended for clarity, but there are some minor changes to how things work. The semi-major change is the order of the greenlights and community greenlights. It’s being switched to make it easier for the domain teams to decide what to work on. Once this passes, you will have community greenlight polls happen before domain greenlights provided by the domain teams.

Risk Domain Team
  • Cyrus’s sub proposal to add a Risk Domain Team also seems fine. Everyone knows who Cyrus is, so writing a whole essay about who he is and why he wants to be a Risk Domain Team would be an overkill. Cyrus, do you want to talk briefly about your proposal?

    • Cyrus: Sure, I don’t really know what more to say. It’s in line with the other Domain Team proposals. I don’t think there’s much to add.
MIP12 subproposals
  • There were some irregularities on the 2 MIP12 sub proposals. They were submitted after the submission window due to a minor technicality. Since we’re still getting started with the governance cycle, that doesn’t seem like a reasonable justification for not considering them for this cycle. That said, there was some confusion about the requirements for domain work presented in those sub proposals. As MIP12 was written, it assumed that complete domain work would be presented for each domain, which is not present. So I think we’re leaning towards declining these sub proposals as part of the MIPs process and doing them as the weekly cycle instead until we can tidy up the MIPs process and decide what needs to be produced and present for the proposals. Rich, or Charles, do you want to comment on this as well?

    • Rich Brown: It’s something we can break-off into during the Q&A session. Process is something that I could talk about for hours. There’s workflow versus process or the letter of the law versus expediency. There are larger issues that need to be understood. Maybe I’m a bit more conservative regarding these things. I think that the MIPs processes will take us months before we onboard completely, we can talk more about this in the Q&A session.

    • Charles St Louis: I’m definitely interested in talking more about how we can further improve the MIP12 process during the discussion, and I do think it makes sense to push it more towards the weekly cycle and take some extra steps to ensure that we can better prepare the monthly cycle for July, in terms of getting collateral added. So really looking forward to having an open discussion.

  • That sounds good. To be clear, no one is at fault right at this stage.

MIP13 and MIP14
  • Rich Brown: I’ve talked about these MIPs in the last two calls. They seem innocuous on the surface. These two MIPs are potentially really powerful. That’s both a good and a bad thing. I really encourage the community to have a look at these proposals because they represent a fundamental shift in the way that this community will work. MIP13 is a Declaration of Intent, so it allows for community members to decide if they want to do something and come up with some plan. We have informal or slightly formal mechanisms, we’ve been doing this for a while, but there’s a significant missing piece to that puzzle that this MIP seeks to fill.

    • LongForWisdom: About a week ago, I removed the bounty sections, so I wanted to make clear that MIP13 doesn’t actually allow any money to change hands in this iteration.

    • Rich Brown: Sorry, I might be blurring both of them together in my excitement of the conceptual importance of these things. The DAO needs to have agency and sovereignty, so the community needs to be able to determine if something needs to happen, and then it needs to be able to make that thing happen. There’s nothing stopping that from happening, besides the time and effort required to do that, and there are a significant number of tasks that need to be paid for. You get what you pay for in this world. When you want high-quality work, you want people to devote lots of time and energy to doing something you need to have a mechanism for which they can be compensated, and that is the transition into MIP14. It’s a generic process for transferring DAI from the protocol into a specified ETH wallet address. This should fill you with terror, but the protocol has obstacles in place, governance delays, significant barriers to entry in getting executives past, so there are some checks and balances. But ultimately, this is a very powerful mechanism that allows the community to decide to get something done and get the financing to do that. This changes everything, in my opinion. It’s necessary, it’s important, and requires a lot of thought and care about its implementation.

    • Ultimately, I don’t see why they should not be included. My request here is that the community dig into these two threads and give them a great deal of thought because these will be the most powerful tools that the community will have in its arsenal. That’s MIP13 and MIP14, please have a look at them.

Collateral Valuations
  • Cyrus: I want to make a quick point. We posted two collateral evaluations last night in the forums. I know they were mentioned yesterday as part of MIP12, but I just want to make sure that people get some eyes on this. Happy to discuss in the forums, and maybe in one of the coming governance calls.

    • LFW: It may be good to do a brief presentation about them?

    • Cyrus: Unfortunately, not today, but sure.

Risk Analysis

Vishesh Choudry

The State of the Peg


  • Dai has been at or slightly above peg in the past week or so. Even a slight dip below the peg. That is a positive indicator given that ETH price is rising.

  • It appears there is an increased appetite for leverage, which typically brings the Dai price down. That being said, it’s not dipping sustainably below a dollar. During previous upturns, the primary concern was not Dai staying above peg but rather Dai dipping below and staying down there. They are similar problems, but they have different results.

    • Either perceptions have changed, or the fundamental economics have changed. Probably the former. Almost like Dai has gone through three cycles. First, there was hesitancy to arbitrage when Dai price would dip below, and because there was hesitancy to arbitrage, it would stay below. Then there was a time period where through community effort, generating new demand, adjust monetary policy levers, etc. the community was able to stabilize Dai above peg. In the third cycle, after that point, the Dai arbitrage use case has more confidence. Since then, the community is almost too ready to arbitrage Dai and hesitant to let it go and sell it. Though now it seems that Dai has come back to peg from that meta cycle. Dai’s gone through a bit of an evolution in that cycle. It seems, for now, that it’s back to a new normal. Where it hovers above peg slightly as opposed to slightly below, that’s the status quo for right now: at peg means hovering slightly above.

  • After coming back from the extreme price discrepancy above peg, it was still higher than people’s comfort zone at 1.01. Then it dipped below and went above again. Getting back to a pretty average price as close to peg as you want it to be. What happens to ETH next will be an interesting watching experience since ETH whiplashes and may distress the situation again.

  • Under the hood, Dai is up to $132 million in total supply. $119.8 Million Dai is from ETH with a Debt Ceiling of $120 million, which is tons of utilization and is basically hitting the cap.

  • We’ll talk about why that happened and have a discussion about: does it make sense to raise DC at low SF? If there is free money in the system, do you want to keep raising that DC? If you look at this decision purely from a quantitative point, it makes no sense to have SF’s at zero. That move was made for a different reason, distressed situations, etc. There is a discussion to be had about what strategy we start taking right now.

    • The perception and psychological strategy? The one where we are restoring confidence in the system?

    • Or do we focus on where we extend the risk of those holding capital for the system? For those who invested in the system, it seems like having SFs at zero will cause us to max the DC again.

  • Dai from WBTC is sitting at around $9.5 million. We’ve seen a few more mintings in the last few days. Almost at full utilization.

  • Worth noting it was coming down once the USDC-A SF wasn’t zero. Not a huge use case for it at the moment. Demand is low, and the amount issued has been coming down.

  • Dai from USDC is at $1.2 million.

  • Dai from BAT dropped off in March, floating at half a million.

  • ETH is the interesting one. It was at $107 million and then shot up since the 28th. Long term rising, but a slight drop off in March then it resumed a rising trend.

  • A single ETH-A vault that minted $10 million Dai and then dumped it on Compound for cDAI yesterday. Earning that free 0.3% spread since there is technically an arbitrage between Maker and Compound while the DSR is zero.

  • When those opportunities exist at such a low cost, you have to expect people to max the debt ceiling and take advantage. Raising it in the past, or in the future, needs to come with a discussion about the likelihood that large mintings are for a flash transaction or free arbitrage opportunity. Not necessarily to create leverage for themselves but to quickly source capital to take advantage of an opportunity.

  • Trimodal peaks in collateralization where you can find most of the Vault CRs. There is a slight uptick of Dai minted from ETH on the lower CR.

  • If you get granular on the vaults, you can see a couple of large positions at a low CR, like 210% or so, which is comparatively low.

Discussion 2


  • Cyrus: There were some discussions in various forum threads that the 10 million Dai mint was being used for the Compound $COMP governance token allocation mechanism.

    • Vishesh: Do we know the latest word on the mechanism for distribution? Is it based on outstanding borrow or lifetime borrow interest? That’s a variable that Compound tracks as well, and it’s not something that people would benefit from just by taking a flash amount of capital and depositing it.

    • Cyrus: I wouldn’t know the answer to that question.

    • Vishesh: Chat is saying that it’s earned only on interest going forward.

    • Tim Black: Yes, and COMP distributes per block. It’s split 50-50 between suppliers and borrowers.

    • Vishesh: Got it. So not a huge opportunity but still something someone could take advantage of for a low cost. If it’s a very low supply rate of 0.38% on $10 million is not a huge amount, but it’s not negligible. I don’t know if other people have been tracking the Compound side of things closely. I have comments on that, but that seems to me a potentially viable explanation.

State of Peg Links
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Open Ended Discussion


Agenda for these meetings going forward


  • As part of the Governance Facilitator Mandates, there is an intention to set the Agendas for these meetings or at least make public the agendas for these meetings at least a week in advance. Going forward, we will be posting the meeting Agenda for next week at the end of this week’s meeting. With a week in advance, if anyone has anything that they would like to present, then they can either message us or post in the thread and say what they want to do. That means that everyone will have an idea of what’s coming and if they want to attend. Obviously, if there’s anything urgent, we can add it, and we’ll try to provide as much notice as possible.


WBTC Debt Ceiling


  • Lev: Does anyone want to talk about the WBTC debt ceiling? When WBTC was added it wasn’t clear where the debt ceiling should be, but now that it’s being used 100% it’s interesting to discuss this, and the risk parameters broadly, the risk factors for WBTC, the general schedule of scaling WBTC in Maker, increased decentralization of WBTC… Some of these topics are better addressed in the Forum, but I wanted to highlight here that these are things that I think are interesting. Particularly as we hike the debt ceiling, well, depending on what the poll says, but we might be back into that rhythm again. It’s worth thinking whether the WBTC debt ceiling should be proportionally hiked up to a certain point and what the community sentiment on that is.

    • Cyrus: It would be interesting to see if there’s demand outside of the current 0% market. Right now, it’s subsidizing huge carry trades. If the rates were to normalize back up, would the demand still be there? At this point, is it a good idea to just raise it if we’re subsidizing a secondary lending platform to take advantage in that way. At least with ETH, you don’t have to worry about the counterparty risk or the decentralization risk. So if the goal is to get the Dai peg in line, for me, it feels safer to keep raising the ETH debt ceiling.

    • Lev: I didn’t mean to suggest that we should blindly raise it. There are some limits related to the counterparty risk. For ETH, there should be a limit where if you have too much Dai issued against ETH, ETH liquidity becomes a serious problem. I don’t think we know where exactly that level is. Or at least as a community, I don’t think that we have come to a consensus on what is the hard limit for that ceiling. But as a guess, somewhere between 100 million and 1 billion, we are going to start to have serious problems with liquidating. A Black Thursday scenario would be not only bad with what we had with the auctions but also bad from the ETH liquidity point of view. And ETH uses BitMEX all the time, so there’s a crazy BitMEX liquidation already this week. There is also some level with ETH that we would have to worry about. The nice thing about BTC is that there’s extra liquidity there. When this was initially added, we did not discuss in much detail what the appropriate debt ceiling should be. I don’t think it made sense to argue too much since we didn’t even know whether 10 million Dai was going to be generated against it.

    • Cyrus: Those are all valid points. In terms of liquidity, one point that I want to make is that I think before we hit the constraint of the liquidity of the collateral assets on the exchanges, we will hit the keeper’s Dai liquidity constraints first. Keepers will run out of Dai before the markets run out of asset liquidity, I think. Given that ETH and WBTC are pretty much correlated, at least on the huge downturns, whichever one crashes or has the most Dai outstanding will cause a DAI liquidity crunch. The keepers are going to be constrained one way or another. From that perspective, I don’t think you will get a major benefit one way or the other. For me, it’s more a question of the counterparty risk and how the community wants to deal with it, rather than looking at BTC and seeing if BTC is some small percentage more liquid than ETH.

    • Lev: I have two points. I’m not sure if I straightforwardly agree with what you said about Dai liquidity. I do agree that Dai liquidity is extremely important for downside liquidation risk. However, I’m not sure that Dai liquidity gives you a straightforward cap on the debt ceiling of a collateral asset, because as you grow the debt ceiling, you have more Dai issue, and you expect to see more keeper Dai inventory. So as a thought experiment, if we set the ETH debt ceiling ten times where it is known, 1.2 Billion or something like that. If we reached that, I would expect to see ten times more Dai available for Keepers because we’re increasing that Dai by increasing the debt ceiling. So it’s not like they wouldn’t keep up with the increased issuance. You’re growing the whole market, maybe proportionally. Do you see what I mean?

    • Cyrus Younessi: I might have misspoken. If you have a 50 million debt ceiling between ETH and WBTC, if they both crash at the same time, keepers will still have the same amount of Dai constraint, and even if you 10x it to 500 Million, you would still have the same constraint. My point is more that when choosing to allocate between ETH and BTC, you would assume that they’re part of the same class, the way you want to mix them would potentially not be based on Bitcoin’s liquidity versus ETH’s. Potentially there are other bigger concerns.

    • Lev: I agree with that. You’re saying that we’re exposed to this factor… “crypto” or BTC/ETH, and then most is coming for that. I agree that they’re correlated assets and you’re looking at it as: Do you want to split this massive exposure between ETH and BTC. From a pure liquidity point of view, I think that BTC has more liquidity, but you also are introducing this counterparty risk.

    • Cyrus: My whole question is: is that trade-off worth it? Do we want to have potentially marginal extra liquidity for the added unquantifiable counterparty risk? Maybe we do, that is totally fine, but it’s a conversation we need to have. And I think it’s a discussion that has to happen before raising the debt ceiling on ETH and WBTC, that’s all.


WBTC being used for rate arbitrage


  • LongForWisdom: Sam asks in the chat: Who’s using WBTC? Nexo’s using a large chunk, what are they using it for?

    • Cyrus Younessi: The best I know is from the forums a few weeks ago about rate arbitrage.

    • LongForWisdom: So they’re taking actual BTC and offering Dai in exchange, and they’re getting that Dai from the Maker Protocol at a cheaper rate, essentially.

    • Cmooney: I believe that’s the case. Isn’t their rate something like 5% or 6% right now?

    • LongForWisdom: I’m not sure, but yes, it’s higher than the WBTC-A SF. The follow-up question is, would we expect Nexo to repay that as soon as the rates go above that level?

    • Cyrus Younessi: Right, above some threshold. My idea was to wait for that and see the more organic demand for Wrapped Bitcoin before we start fiddling around with debt ceilings.

    • Cmooney: If we are going to raise the debt ceiling, we should do it in lockstep with some sort of function of rate increases as well. Maybe we should put like 25 basis points change for risk premium on WBTC now so that we’re at least being compensated for the counterparty risk, but if we’re going to raise it later, which could bring more diversity to people taking advantage of that we may want to, say, for every million we go by 25 basis points. Some function like that. If they’re willing to go up to 6%, that would be a percent per 4 Million, so like 24 Million or something, I don’t know. Maybe we should discuss debt ceilings at some point, and then we also get that on the lower 10 million that are already there. I don’t know. I made that up literally right now. So maybe we should discuss the debt ceiling going up with the risk premium because we have to be compensated for the counterparty risk with WBTC.


Raising the rate for WBTC


  • chris_p: One comment about WBTC is that it’s not a static thing. There are a lot of discussions going on right now to make it much more robust, adding more people to help out with the Wrapped BTC DAO, and this is something we should consider too when we discuss how we’re managing WBTC.

    • Cmooney: Does anyone have any idea on how high Nexo will be willing to go for this rate arbitrage?

    • chris_p: It’s a marketplace. Somewhat unfair to judge the outcome of something because someone has found some clever way to make a market more efficient. I don’t think we should poopoo necessarily on anyone that’s speculating on a different aspect of DeFi. I mean some people like speculating on the ETH, they open up a CDP, and you’re long ETH. Some people see an opportunity, and there’s a tool that they can use. We’re competing against other projects, whole other blockchains, the community should be cognizant of that.

    • Cyrus: I agree, I don’t think that anyone is trying to penalize specific actors.

    • chris_p: If what I said came as that, that’s not what I was saying at all. Our problem is that we have 25,000 or 26,000 Wrapped BTC in our system that presumably has a similar liquidation point and would be nearly impossible to clear. If we hit liquidation on that. At the very least, we should be building a surplus buffer in order to possibly handle the liquidation of that asset, and MKR holders should be compensated for some amount of risk. I think it’s great we found a user that really wants to use the service. That’s awesome, but we should be compensated for the risk that the protocol is taking.

    • LongForWisdom: So it’s not something necessarily bad, but something that we need to pay attention to.

    • chris_p: Of course. I think that we all generally agree that we should raise rates on Wrapped BTC.

    • LFW: Yes, we should see what people say in the forums.

    • chris_p: Yes, of course.

Kurt, Sam MacPhearson, Cyrus Younessi

Risk Premiums


  • Kurt: We should approach this from the core mandate of the DAO, which is “to maintain the stability of the Dai peg and grow the Dai market cap while managing risk” in that process. Would anyone disagree with that fundamental perspective?

    • LongForWisdom: I think it all flows from MKR holders wanting to make money, but yes.

    • Kurt: Trying to achieve those things, the question should be, how do we balance the risk versus the reward, potentially upping the WBTC debt ceiling and what do the rates need to be that balance that risk-reward equation. I like Chris’s proposal because, in some sense, the risk is increasing not with the debt ceiling, but with the debt ceiling utilization. So as long as the model of the Dai peg is holding stable, turning up the debt ceiling and the rate in concert, which is more of a response to the previous debt ceiling being utilized, is fine. I feel there’s a general sense that our rates are a little low. Maybe it’s my perception. Given the centralization and the counterparty risk of WBTC. So we probably, in principle, want to raise rates but just in a way that doesn’t jeopardize the Dai peg.

    • chris_p: raise them nice and easy, you know. Real slow.

    • Sam Ma: More generally, I think all the risk premiums are probably lower than what the actual numbers are. I was wondering when do people really want to start thinking about actually setting these to what the actual numbers are. ETH-A, for example, is obviously not a 0% risk. That number is something greater, when should we think about setting it to what it actually is as determined by the risk teams.

    • Cyrus: It should be moved as much as possible while the peg is healthy. So I don’t think we have broken through the wall of buy-side liquidity for Dai. I think once that happens; then we start moving rates up to their targeted risk premiums.

    • Sam M: Yes, that makes sense to me. Wait until it starts going up because you don’t want have these jerk things, if we up ETH-A to say 5% because that’s what the risk premium is, then the base rate doesn’t come down to counter it, you don’t want to see a sudden outflow of Vault users.

    • Cyrus: Yes, I don’t think that you would want to make that jump all at once. That would cause a little bit of chaos. I think you should gradually do it.

    • Sam M: What about determining these numbers in the first place. Because I’m still in the dark as to what a reasonable ballpark is?

    • Cyrus: In the Keynesian 0x Reports, we actually quoted the numbers as specific risk premiums and not as what the stability fee might be. So it could still differ, for the Dai peg, for example. You can check our methodology in the forum post, and we can discuss it and see.

    • Sam: That’s great. I’m interested particularly in ETH-A as it’s the biggest.

    • Cyrus: Yes, we can speak over the forums or the chat.

    • Sam: Sweet.

Rich Brown



  • Rich Brown: What I say quite often on these calls is that we have a complex ecosystem, we have lots of things to do, we have coordination issues, we have a lot of people that we call a DAO, we have MKR holders, and the Foundation itself. We all established a bunch of cultural norms on how we do things over the last year or so through the forums, the chats, these calls, and the portal itself. As the complexity and the volume increase, that’s usually the time when people start to ask if we need a process and what they look like. That’s where MIPs came from. I feel we haven’t quite internalized what that implies. We have all things we need to do, a series of documents that explain how to do those things, and we need to transition from one world into the next. There are issues around how we match processes to our workflows and how we alter our workflows to match processes and make sure we all understand what’s happening and when. These are larger discussions, and I’m sort of having second thoughts, whether that’s a discussion for today. If people have thoughts, I could be convinced and start talking about this stuff right now. Or we can plant a seed and, in another call, get into the specifics.

    • LongForWisdom: I would be interested in seeing what people think about the MIPs process if they think it’s helping in a tangible way. Either now or whenever.

    • Cryptowanderer: If you see it as a living process, then it’s probably a positive thing. The mere fact that you’ve been able to suggest 2 MIPs that A) Get on Rich’s nerves and B) Give the community some real power. It’s quite exciting. Seeing that there’s a consistent line of thought as the Foundation gets towards this gradual decentralization based on which operates, and the MIPs provide that framework. Nobody thinks that they’re perfect. Based on that, we should become more and more familiar. Answering Rich’s point about how we address these specific pain-points and coming into these meetings with very specific points that help us improve. That would be cool to see.

    • LongForWisdom: I absolutely agree. If anyone has identified a pain-point but doesn’t feel like going through the writing of the MIPs process or is nervous about whatever, you can talk to me, or Charles or anyone for help or advice so you don’t feel like you have to do everything by yourself.

    • Rich: I’m not sensing a strong outpour of deep thoughts about where we’re at. So maybe we’ll formalize it, and bring it back in another call, or it might come back organically. This might be a good time to wrap things up finalize the call unless there’s any other order of business.


Rich Brown


  • Thanks again, everyone, for joining us today. We’ll be back next week with more exciting adventures of Maker governance. Thanks for the presentations, the questions, the discussions about WBTC, and we’ll be posting the video one the social channels. Thanks, everyone.

Links Shared in Chat

Abbreviated Terms

MCD: The Multi-Collateral Dai system

CR: Collateralization Ratio

DC: Debt Ceiling

ES: Emergency Shutdown

EV: Executive Vote

GP: Governance Poll

SF: Stability Fee

DSR: Dai Savings Rate

MIP: Maker Improvement Proposal


  • Tim Black produced this summary.

  • David Utrobin produced this summary.

  • Igor Teslya produced this summary.

  • Juan Guillen produced this summary.

  • Everyone who spoke and presented on the call (listed in the headers.)

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