I honestly can’t find a good topic catagory (apologies @LongForWisdom )
I pulled this from the tail end of another post. I believe the topic is even more important currently.
We can make it a formal poll but I am going to refrain unless people consider this an important discussion and we can frame a poll appropriately.
The issue that seems to be cropping up in different ways is the fact that USDC is now backing 60% of all DAI and this is leading various people to have significant concerns about protocol risk of the majority of DAI being backed by a centralized stablecoin.
This came to the fore at least in my mind due to post from @hexonaut regarding G-UNI as well as risk requesting some significant SF changes to try to get USDC off the books.
There appears to be a Maker Trilemma that can’t easily be satisfied.
DAI PEG to 1.
DAI fully backed 1:1
The question as a poll would be for everyone to apply a ranked choice voting of order of importance of the above to the above.
The reasoning for the trilemma is as follows:
Practically it appears we have to give up on 1 of the above to satisfy the other two.
Discussion of the points in the Trilemma
DAI backing 1:1 - MakerDAO possibly could manage the PEG if we basically mint unbacked DAI or allow the DAI 1:1 collateral value backing to slide. There are many ways we can do PEG management (there were a number of viable approaches some technical some managerial) if we give up on 1:1 DAI collateral backing. (NOTE: In conjunction with this I honestly would like to see us with better control over system operations so that we can shut down components vs. ESing the entire system. These are pretty heavy discussions should giving up on 1:1 DAI collateral value backing be chosen by polling).
Decentralization - I think a real discussion of what this means in terms of allowed collateral backing, as well as governance is appropriate. In reality I think we are talking about the system being anti-fragile but I think many people realize that Maker is NOT anti-fragile in any sense of the word, but I believe many people would like to move towards a system that has greater anti-fragility if possible. There already has been a lot of writing and thinking on this topic but when it comes to polling this needs to be spelled out in concrete ways for people
DAI PEG how close to 1. There has been this clamor about DAI being off PEG before the PSM - so much maker chose to take on increasing USDC to maintain this ‘hard PEG’ via the PSM. I honestly think people don’t realize how much risk has been taken on by Maker with the PSM to maintain the PEG. I brought up this idea of using USDC to mint DAI during the week of Black Thursday as an ‘emergency’ measure, not as something Maker should take on permanently. But once this was done people ran with it. Rather than approach anything with ‘moderation’ Maker pretty much has gone ‘hog wild’ not just with this but everything else. I personally found it ironic talking to people who were concerned why is Maker so slow to do anything, when in reality MakerDAO does a lot of things faster than fast. When we really need to pause and think we just dive headlong into something that gets political support (for good or ill) and hope it works or we will clean up the mess later.
Well folks the time to clean up the PSM and USDC exposure mess is now upon us. imo based on my reading of how legislation is working here we have perhaps a minimum of 1 year and a maximum of 3 years to deal with this situation.
We also need the community to speak up with a general poll.
Everyone can and should speak so everyone can answer the poll.
I really want to hear from thousands of people not just MKR holders, Maker participants but DAI holders, vault owners (past and present), and anyone else.
I also really want to understand how other protocols think that they will avoid protocol issues if legislation comes that basically forces stablecoin issuers to blacklist their protocols effectively freezing funds. Is this a real issue or not?
We keep dancing around how to deal with, for lack of a better term, what I will call the Maker Trilemma but in the end we have to decide IS this a true trilemma, or not.
Until we frame the real issues here we basically are pot shotting solutions and probably digging deeper holes for the protocol and avoiding the real issues which could broadside the entire DeFI space at some point.