As most will be aware, recently Maker Governance have had to react quickly to the introduction and growing popularity of liquidity mining in the DeFi ecosystem. This post summarizes the emergency and non-emergency responses that we’ve taken so far, and will be kept up to date as the responses continue.
USDC-A Stability Fee and Debt Ceiling Increase
Just after the July 2nd Governance And Risk meeting, @cyrus of the Risk Team proposes to adjust the USDC debt ceiling and / or stability fee in response to the proposed change to the COMP distribution as an emergency measure.
The result of the polls is a majority for the increase of the USDC-A debt ceiling to 40 million, and the Risk Premium to 4%.
This change is included in the regularly scheduled executive vote on Friday 3rd July, which passes successfully.
ETH-A Debt Ceiling Increase
On Sunday July 5th, @cyrus of the Risk Team polls to change the ETH-A debt ceiling and risk premium as a result of the amount of Dai minted from ETH-A increasing to within a few million Dai of the existing debt ceiling.
The result of the polls is a majority for the increase of the ETH-A debt ceiling to 160 million.
This change is included in an emergency executive vote on 6th July which passes successfully.
Peg Stabilization Module (PSM) Proposal
On Saturday, @charlesstlouis describes the idea of Peg Stabilization Modules on behalf of the Maker Foundation. The PSM is a new smart contract that would allow the trading of minted Dai for USDC to directly help to maintain the peg (along with other advantages.)
On Monday, @charlesstlouis creates a poll to find consensus on the desired implementation speed for the PSM.
The poll and the urgency surrounding it is somewhat controversial. Given the timing and nature of the change @LongForWisdom, one of the Governance Facilitators imposes a higher bar for implementing the PSM as an emergency action.
This bar is not met, and the PSM is instead planned to be discussed over the month of July, and implemented at the end of the month provided it can pass on-chain polls confirming that MKR Holders support its implementation.
@Joshua_Pritikin proposes the above signal to read the feeling among the community around some of the more complex proposals surrounding the PSM. This was in response to a number of proposals from various community members that would be unlikely to be technically feasible for the first release of the PSM.
The poll is ongoing, however at the time of writing it appears that the majority would prefer to see the PSM implemented without major scope changes.
July 14th - PSM Governance Timeline
@LongForWisdom, shares the timeline for voting on the PSM and calls for Maker Governance to work on figuring out what parameter sets should be available for vote on-chain.
The Foundation shares the above statement, saying that they will not continue work on the PSM.
July 23rd - PSM Poll fails to pass (barely)
The first on-chain poll on the PSM fails to pass. If the community wishes to pursue this further, the community will need to work through the MIPs process.
Request COMP Rewards exclude DAI
On Tuesday, @equivrel formally begins a signal request around a suggestion that had been discussed over the weekend. Namely that Dai be exlcuded from recieving COMP rewards on the Compound platform. Naturally this is not within the power of Maker Governance to change, but members of Compound Governance indicated that such an action may be possible, if it was desired by Maker.
This signal request returns consensus on a negative outcome. Maker Governance will not signal to COMP that it wishes for COMP rewards to be disabled for Dai markets.
Raise the ETH-A Debt Ceilings
On Sunday July 16th, @Cyrus recommends further increases in the ETH-A debt ceiling in response to the uncertainty around the Dai peg.
The poll ends successfully to increase the ETH-A ceiling to 180 Million.
July 17th - The increase to the ETH-A debt ceiling is included in Friday’s executive, which passes.
Raise the ETH-A and USDC-A Debt Ceilings
On Sunday July 19th, @Cyrus recommends further increases in the ETH-A and USDC-A debt ceilings in response to the start of YFI farming.
The poll ends successfully with a majority for:
ETH-A Debt Ceiling = 220 Million
USDC-A Debt Ceiling = 80 Million
These changes were included in an emergency executive on the 20th, and passed shortly afterward.
Reduce the USDC-A Liquidation Ratio and Risk Premium
On July 22nd, @hexonaut proposes lowering the Liquidation Ratio and Risk Premium on USDC-A after it is discussed heavily in this weeks Governance and Risk meeting.
On July 23rd, @Jtathmann proposes expediting the desired changes in response to the pressure on the peg arising from the YFI liquidity mining pools.
On July 24th, and as a result of these polls @LongForWisdom adds the proposal to change the liquidation ratio on USDC-A to 110% to the weekly executive vote. This action takes place before the polls officially end, with the justification that it becomes awkward to take action early next week due to the monthly MIPs executive.
The weekly executive vote passes, and the USDC-A liquidation ratio is modified to 110%.
Raise the ETH-A Debt Ceiling
July 27th - MIPs Executive - 27/07/20
On July 27th, the MIPs monthly governance cycle executive is due. Due to the increased demand for the ETH-A package, and on the recommendations of @Risk, @LongForWisdom makes the decision to bundle the ETH-A increase into the monthly MIPs executive. The reasons for which are described in the above thread.
Unscheduled Call and Debt Ceiling Raises
On July 29th, @LongForWisdom organises an unscheduled emergency peg management meeting after having a conversation with @cyrus, @rune and other members of the Maker Foundation. This meeting is meant to communicate and discuss stronger measures to control the peg with the community, specifically in relation to an emergency executive vote.
The emergency executive goes live later that night. In addition, @Cyrus posts the following thread: [Discussion] Executive Vote to Raise ETH-A, USDC-A, USDC-B, W-BTC, BAT debt ceilings so that discussion can continue.
The emergency executive passes and the following changes to the Maker Protocol take place:
- ETH-A debt ceiling to be increased from 260 to 340 million.
- USDC-A debt ceiling to be increased from 80 to 140 million.
- USDC-B debt ceiling to be increased from 10 to 30 million.
- W-BTC debt ceiling to be increased from 20 to 40 million.
- BAT-A debt ceiling to be increased from 3 to 5 million.
Feel free to discuss the overall issue as responses to this thread. In addition, I’d love to have feedback over whether this sort of summary is useful in order for people to keep track of events. Thanks!