This post is way to probe the MakerDAO community on what will happen with Maker in the medium term. I assume the medium term as being MakerDAO more or less self-governed with a Foundation less present than currently. I also assume DeFi being way bigger than it is currently with maybe 100M users (1B?), with some only through CeFi (Square, Nexo, …). The overall market cap of all projects (excluding infrastructure) being around 100-1000 billions. BlockFi is a public company with 1000+ employees and 10B of asset under management (AUM), same for Nexo and Aave (the company not the protocol, cf this announcement).
In such world, I see 2 possibilities for MakerDAO.
The protocol future
The first one is focussing around the Maker Protocol and being the minter of DAI. MKR valuation is around DAI minted * natural rate of interest * price earning ratio of the day. Evolutions are expected to be done by either the foundation, the rest of the ecosystem or through some DAI taken from the surplus buffer. Maker would be the lego brick to mint DAI.
It is more or less like today but with more collateral and some fat stability fees that burn MKR.
What changes is the environment. Currently, Nexo is the only institution using Maker. Yearn will come soon. We can expect the trend to grow larger and larger. For instance, Yearn has 70% of aDAI in circulation (was more earlier). It’s more than the DAI liquidity on Aave ( ). Big businesses and other protocols will use Maker Protocol as an underlying.
Now what can happen when your main clients are big fishs and you are a protocol? My guess is that they take control. If the Maker Protocol is important to them, they will put 10 FTE to work on it. Obviously, they will prioritize their work according to their needs. They will also have more power in lobbying, credit and marketing than any other MKR community member. They also have the financial power to buy/borrow MKR shares as needed. Or fork the whole thing, if it’s too much pain to handle a community. You can look toward Mooniswap that already have a third of the liquidity of Uniswap with a steady adoption (and not even cutting fees, neither having a big marketing budget).
Now that feels a bit like SWIFT . It’s an awesome (for the time) protocol that runs the financial world. Now if we compare revenues and profit with Paypal or Stripe, it’s almost insignificant.
Another example that I can think of is the Bank of England (in 1800 era where it was having private shareholders and without support/supervision from the state). Bagehot explains how it was an underperforming bank because there was no incentive to perform. The bank directors didn’t care much of the performance it was more of an utility. The Bank of Scotland was more profitable for its shareholders (until the 2009 subprime crisis).
Last example is GitHub. I think GitHub earning are not the main driver for Microsoft. What matter is the PR, the marketing and cross-selling. Would you buy a GITHUB token?
The business future
The alternative is to play the business way and having resources.
MIP13c3-SP3: Declaration of Intent - Strategic reserves fund (SRF) is a step towards that (financial resoucres). Another great post by @Mitote earlier this year goes in that direction MakerDao needs a Treasury to provide Compensation to its Workers post foundation (focus on workers for now) (financial + HR resources, a lot of good insight here).
Another part is adding RWA which is like having a B2B baking relationship. It doesn’t come cheap on labor at scale.
Basically, if you want to compete against 1000+ employees you need to have the same size. Having a DAO governing at this scale would be a first, a challenge that the Maker community can probably accomplish.
The way forward
While I’m sure that the protocol way isn’t profitable for MKR holders (but I would love to see convincing arguments), there is most likely a continuum of futures between the protocol one and the business one. And getting there (whatever that there is) will demand some kind of path as well.
Therefore, I would love to know what is on your mind regarding this subject. What MakerDAO should look like in 5 years for you (using the context provided in preambule or providing your own) and how to get there if you have an idea. You can be creative obviously ( it’s uncharted territory!) or more inspired by existing DAO / theoretical frameworks.
It seems important to have a consensus on where we are going to get there right? .
Edit: Linking to Long Term Vision for Maker which is similar but more open. Feel free to contribute in any thread.