All of crypto is in full meltdown right now, and it will probably only get much worse (so bad that you won’t believe it - such is the nature of crypto markets). It’s spilling over into peoples emotions and if you check crypto twitter right now it’s not exactly pretty. Basically when prices were going up people like to take the credit and think of themselves as genius traders, but now that things are going down, everyone suffers from cognitive dissonance and look for external reasons and people to blame for their losses.
Maker isn’t looking too pretty either. Our governance process is failing on a number of critical fronts, and we’re about to get flipped in TVL by instadapp, a project that was originally built as a small frontend on top of Maker.
I’ve found that my own engagement (as well as others) on a number of critical governance issues that we are facing right now can’t help but contain some of the desperation and frustration that exists both because of the general crypto downturn, as well as the abysmal performance of maker relative to other defi projects.
The connection where bad governance leads to bad performance in the market, which then leads to bad sentiment in the community that then causes even worse governance is a potential vicious cycle where the whole project can unravel as people fight, argue and dig into their political positions, rather than try to work together, look for solutions and ways to go forward as a DAO. I think it is perhaps the biggest risk we are facing right now due to the combined complexities of the chaotic state of the newly formed core units, the foundations dissolution, the much greater scale that Maker and DeFi is now operating and the brutal, multi-year bear market that likely awaits crypto.
I want to try to address this social risk to see if we can normalize open discussion about it, and proactively take action that strongly prevents governance from moving closer to death spiralling in this critical time.
The most important thing to remember is that when you talk to people on an internet forum such as this, your social brain isn’t able to comprehend that you are dealing with other humans. Your natural instinct is to engage as if you are playing a computer game or dealing with a machine, when the reality is that we are all a bunch of humans talking to each other. There’s no cold, rational machine, no objective algorithm. Just humans sitting in front of screens and writing messages to each other.
For this reason we should all try to strive towards writing nicer things to each other, because normal social cues such as smiling and open body language isn’t conveyed over the internet, they are instead extrapolated from the written messages, and usually extrapolated in the worst possible direction. So if someone writes a considered, critical point about an objective issue they’re seeing, the receiver of the message will likely interpret the message as a personal or political attack and completely ignore the possibility that there is a legitimate reason behind it… Unless great care is taken to convey the emotional context of your message.
At the same time personal sensibilities and feelings should not get in the way of actually acting professionally and doing what’s best for the project and MKR holders. Falling into this trap is just as bad, if not worse, because if we are not able to make tough decisions and act like a business in a competitive environment, especially a cruel bear market we have a 0% chance of survival. We need to communicate nicely and cordially, while acting professionally and making decisions based on high expectations and standards, with no hesitation to act when it is necessary, even if feelings will get hurt.
I want to end this post with some hopium to help us gather the resolve necessary to overcome the great challenges we face. If we solve how maker governance politics plays out on this forum then we have a bright future ahead of us, because the reality is that maker has always thrived in bear markets and will do so even more in the one that’s ahead of us, mainly because of two things: USDC and RWA.
The huge amounts of USDC that maker is accumulating is grossly misunderstood, with almost everyone painting it as a liability despite it being the biggest ace up the sleeve of Maker. The reality is that it is a huge asset, and we should strive to accumulate as much USDC as possible. Why? It is capital available to us at a 0% cost, since we are paying no DSR. The more USDC we have, the more we are essentially able to borrow at 0%, and then turn around and lend out at good, stable, competitive rates - the perfect recipe for a highly scalable financial business. The thing about USDC is that while it doesn’t pay a yield, it is hyper liquid. It is the easiest thing in the world to get rid of when we want to and have the legal infrastructure to do so, because it is literally money.
RWA is the other critical piece of the puzzle. The real world economy doesn’t care about crypto cycles, and there are always good and safe yields available, especially as you scale up and do larger deals. We are almost past the point of no return where DeFi will change forever as the Maker community starts to wield the power to deploy unlimited capital through highly scalable, maximally secure and regulated Delaware trust companies - the global standard for financial transactions. Once we have passed that threshold we will actually be able to participate in the same billion dollar deals that financial giants like Goldman Sachs base their business on.
This won’t be tests, or “blockchain trials”, or cool tech experiments. If we can keep the ship steady, Maker will soon become a real world bona fide financial giant, armed with our giant piggy bank of 0-cost USDC that we can deploy in safe and moderately profitable transactions at maximal economies of scale. Bear market or no bear market, it will make no difference.
Meanwhile the rest of defi will be waddling in broken ponzinomics and worthless coins that just don’t make sense in a bear market.
But before we can get there, we first need to get our governance process under control. So please lets all work together to steel our resolve and collectively improve as a governance community by speaking more nicely with each other, while expecting and demanding professionalism, and be prepared to take the necessary, tough actions that are needed to survive and thrive in a professional and competitive business environment.