It’s been a minute since I brought some (mostly) unfiltered musing to the forum, so I hope this reflection is welcomed and gets some discussion. Happy to take feedback on better ways to present these thoughts if you have them, just shoot me a DM.
Maker the meme: a decentralized, central bank
Whether you personally feel Maker should be inserting itself as a “decentralized, central bank,” it’s hard to argue that this perception isn’t already saturated in the crypto space. People looking for a phrase to describe the protocol often lean on this description. Despite the linguistic oddity of being both decentralized and a “central” bank, this description is at least partially accurate as an issuer of DAI. If you do not agree, I suggest checking out Seb’s Crypto Banking 101 explanation as it makes a good case for how “money layers” function.
So bearing in mind our perception (meme) as the (de)central bank, I began to wonder how me might be able to step into this role in the crypto space for more profits and notoriety. It’s our brand so why not own it?
DAOs helping DAOs
Admittedly, my first thought re: Maker as a central bank was in connection to “bailouts” for lack of a better word. We already have experienced a positive situation where Yearn was able to borrow against their treasury token to make users whole after an exploit.
This event not only helped stabilize the greater DeFi ecosystem, but resulted in some positive press from Maker. However in this situation we were fortunate, YFI was already added as a collateral type and had plenty of available DC for the team to make users whole in a permissionless way. If that wasn’t the case, would we have been able to raise the DC in time for Yearn to utilize our bank?
Exploits will happen in crypto and more often than not, capital is needed if a project wishes to gain back the trust of their users. Is there a way to safely capitalize during a crisis and grow both Maker revenues and brand through partnering with other organizations? DAO to DAO is a pretty nice starting point in my mind and there is likely to be a bit more understanding about the speed of progress and the difficulty of making an agreement that has to be approved by token holders.
A raising marketcap lifts all tokens… or something like that
While other crypto projects necessarily represent competition for attention, capital, and often user solutions, we are not playing in a zero-sum game. Helping other organizations gives us the chance to increase DAI, SFs, and Maker awareness all across the crypto ecosystem.
Huge thanks to @juan who put up with a far worse rant on this subject. Despite not liking the idea of bailouts (feel free to slam me if I’m mischaracterizing ) Juan made an excellent point that organizations could mint their token and borrow against it to fund growth, without dumping on the market. This would be a far safer scenario for Maker and wouldn’t require urgent judgement calls on the solvency of other crypto projects. Yet how many DeFi protocols have tried to take advantage of this? One neat (and potentially uncorrelated) follow-up with Yearn is that they are now utilizing the YFI-A vault more healthily for YFI yield strategies. Could opening up our central-bankness lead to further integration and utilization?
This growth case seems like a better deal for Maker as the positon would be opened during a far less volatile moment, but it too is just one example of how embracing our meme could lead to more DAI generation.
Considerations and Next Steps
Any push to take on more collateral is going to involve risk. New collaterals and tokens currently under attack ratchet up that risk pretty severely. Not to mention the amount of work (due diligence, SC, governance drafting etc.) that is needed to make changes to the protocol. At the end of the day it’s quite possible that it’s not worth investing in our meme. We can continue to drive growth and not worry what opportunities and exceptions are circulating around us, but I think the general Maker ethos is one that is willing to pull back the curtain and explore the possibility that we could be functioning much better.
Here are some ideas I had on how we could explore this topic further:
- Working group to explore crypto “bailouts”
- (de)Central Bank Core Unit: a cross section of talent exploring further profits through traditional finance practices
- Expanding Gov Coms, Marketing, or Growth Core Units to focus on DAO to DAO (or B2B) communication.
- Media blitz highlighting how other projects can use Maker to fund growth, respond to a crisis
I think I’m on the cusp of a valuable thought here and I’d like to leverage the collective intelligence of the community to see if there really is an opportunity or if it’s just an exercise in exploring different use-cases for vaults.