[Agenda/Discussion] Scientific Governance and Risk - Thursday, October 3 9AM PST (4:00 PM UTC)


Governance Segment

  • Richard Brown: General Q&A

  • LongForWisdom: Governance at a Glance

Risk Segment

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.

Episode 55: October 03, 2019


  • 00:00: Intro with Rich Brown
  • 02:59: Governance Engagement/Resources Discussion
  • 43:00: Dai Market Analysis with Vishesh



ES: Emergency Shutdown
SF: Stability Fee
SLP: Secondary Lending Platform
DSR: Dai Savings Rate

Introduction & Governance


Summary & Introduction 00:00

  • We usually have a lot to go over, but today there are many people on the move. Today’s call is going to be a little more relaxed.
  • I want to see what we can do about making the content of the call come about more organically.
  • Give us feedback about the call.

Discussion 02:59

  • Chris Blec: I don’t see many back and forth discussions on these calls. It’s usually straightforward, with not a lot of room for disagreement. It would be interesting to try debates on these calls.
    • Inviting people to share counterpoints and alternative views on the call is essential.
    • Our goal should be to get a better understanding of the other points of view.
    • Rich: I think a part of it is that we are wonderfully aligned on this call about our goals.
  • LFW: Our alignment should be rooted in our commitment to scientific governance. My idea is that there should be one right view for the given evidence.
    • Alex Evans: That’s very difficult to do.
    • David: Complex matters will have a divergence of good views that align with scientific governance. I don’t think it’s binary.
  • Alex Evans: What maximizes engagement? I’ve noticed that engagement happens when there is something to talk about. For example, a few months back, when everyone was discussing the SF adjustment policy at a time when the consistency of the raises was causing controversy.
    • One thing that might be interesting to do is asking ourselves, “Do we want to generate engagement at the cost of something else that might be more useful?”
    • Educational presentations, like Nik’s presentation on Oracles a few meetings ago, may sometimes be more useful, even though they don’t necessarily create as much back and forth engagement.
  • Rich: Maybe it’s a question of what is an appropriate amount of back and forth? We know that we don’t have a lot of time in these calls, and these calls are more of a push-medium.
  • Matt Lucas: As someone who doesn’t engage too much, often, the amount of information on these calls is a lot to take in, let alone engage about. One idea is to front-run things a little better in these calls. If people come to the call prepared to discuss and think about a specific topic, it may increase engagement.
    • LFW: Agree, one of my points is that presentations are hard to digest at the time of the call. I’d like to see presentations put in the forum before the call, and then also repeated in the call, then questions called for. Serves both those with time to prep and those that don’t.
    • Rich: MakerDAO governance is work. It takes community members doing homework and devoting time to keeping themselves updated to be able to engage most effectively. We’ve been working hard on crafting solutions as a community to reduce the overhead, creating summaries, recaps, central threads, etc…
  • Matthew Rab: I think what we’re struggling with attracting more voters due to the disillusionment of whales voting, and the complexity of many of the matters. One idea is to change the output of the SF poll to be the weighted average of all the votes rather than the winning choice itself. This would give small-holders the ability to have a real impact; even if small, it would be real.
    • Rich: There are so many pros and cons here. What’s the most important thing? To guarantee the security of the system by allowing the people with the most to lose to be able to fail? Or is it to have a financial system that is most closely tied to how the aggregate wants it to be, from an ideological perspective?
    • Matthew: My argument is that we all have something to lose, not just whales. For binary votes, it might not work. But for computed models, it might be better. For example, on SF adjustments.
    • Rich: I’m concerned about the hidden flaws of a mechanism like this. LFW, for example, brings up the point of Sybil resistance for the approach you are advocating for Matthew.
    • LFW: wouldn’t people vote for the minimum or maximum values to maximize the effectiveness of their votes?
    • Matthew: I don’t think this is necessarily an issue. It’s a way of digesting the votes to get to the right combined decision.
  • Chris: To bring this discussion back to the topic of how we get increased voter engagement, the idea that MKR holders look for recommendations on how to vote raises the question of, what are we actually trying to accomplish on this call?
    • Do we want to come out of these calls with recommendations?
    • I am assuming most of us in this call are smaller MKR holders. How do we know larger MKR holders are listening to these discussions?
    • What info/summaries do we want top HOLDlers to have? Are recommendations too esoteric?
    • David: To answer Chris’s question about what we are trying to accomplish with these public discussions, I believe it is to have publicly documented reasoning around the best recommendations for various matters in governance. This way, if a large MKR holder votes contrary to the consensus of public discussion, there is a campaign that can be made.
    • Matthew: What I’m trying to protect against, to your point David, is the risk of a hard fork where the whales who far outweigh the public governance community no longer adhere to the discussions and essentially go rogue.
    • Chris: I think we shouldn’t underestimate the impact of public discourse for smaller MKR holders. If what you say has impact your 2 MKR might have a 2000 MKR impact on the actual vote.
  • Rich: Excellent Conversation


  • The next 3-6 months will be a transformative season in MakerDAO governance. Addressing issues like representation, campaigns, robust resources, and alignment.


Forum Activity Recap 42:21

  • The forums have been pretty quiet this week. The only thing I’d mention is the Debt Ceiling poll is live right now, and discussions are open to anyone with an opinion they want to present.
  • Governance at a Glance Thread



Dai Analytics 43:00

Relevant links

Santiment Maker Data
Graphs about Maker
Graphs about DeFi Loans
DAI 24hr VWAP Graph

  • It’s been quiet across metrics this week, despite the fact the SF was lowered.
  • Dai supply took a hit with the jump in ETH price about a week ago. Since then, it’s been coming up slowly; at the time of this call, there are 80.8MM Dai in circulation.
  • Long term relationships between collateral and ETH price remain strong. It seems to be one of the most predictable behaviors of users on the whole.
  • The average daily volume on Dai markets has been around 2MM. In relation to other assets, it is small with thin liquidity. The order books tend to have fairly light liquidity, which makes Dai susceptible to price crunches.
  • 24Hr VWAP is 1.005, 1.48MM in volume.
  • 7 Day VWAP is 1.008, 17.78MM volume
Secondary Lending Platforms
  • Borrow rates are more expensive on Compound than on the Maker protocol. It’s interesting to watch the delay in refinancing between these systems.
  • Supply rates have tracked closely with the Stability Fee.
  • Borrow volumes of dYdX have come up a little but generally can be considered stable at the moment.
  • Supply volumes also remain stable despite the SF adjustment.

Questions to Vishesh

  • Rich: Concerns about smart contracts out there, especially as the collateral starts auto-responding to market spiraling? Mostly concerned about Instadapp, Compound, and Maker.
    • Vishesh: I see Instadap as a rate arbitrage tool. Filtering out to see transaction volume affecting MKR and DAI is probably an economic efficiency layer applied to the system. I don’t really see the case where auto-responses are bad. Sometimes its more concerning when there isn’t a quick response to market changes.
    • Rich: My concern is with runaway bots. There was a time that DAI was listed on an exchange, and it had native trading bots. So you could see these strange price changes around the peg. Just wondering if the same risk applies to smaller protocols with amounts affecting the ecosystem at large.
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