Regarding MIP58, your comment is more on the legal structure.
First, it is my understanding that MakerDAO is looking for diversification. So adding one legal structure on the shelf is hardly an issue. We need a version of this in other jurisdictions, Cayman Island is not the solution to all RWA problems.
Moreover, providing better legal ownership of DROP tokens is an item in the on-chain securitization roadmap. The Cayman Foundation solves that. Another item is to provide a lender’s voice in the management. Again that needs this structure.
This MIP doesn’t affect the currents RWA and is not a requirement for further RWA. It provides a formalized way to extend MakerDAO governance in the real world.
Feel free to get in touch if you need more information.
Not clear to me this is needed at this point, nor is there any discussion of implications of not being in the Cayman Islands. I also think it is a significant expense without firm justification (i.e. is there a RWA asking for these structures?)
The part of a lender voice is important but again this looks like duplication of legal effort at least in 6s case. As to DROP again it seems like MakerDAO is doing their legal work.
One of my main comments was understanding from the RWA players themselves whether MIP58 is actually wanted, needed, or whether it potentially interfered with the structures already created. Since I don’t have this yet I am simply abstaining on this MIP rather than voting no or yes.
A comment here. I agree with other delegates that I think how we are using greenlighting polls are such that in ‘most cases’ (see below) I am going to greenlight something so we can have this reviewed by CU teams before I am going to be able to say yes or no. In general I think there is a productivity hazard here. That if we basically greenlight everything it means CUs will have to do more work before governance can be informed enough to approve/deny a MIP6 application in particular. There is another hazard that MIP6’s once worked on will be expected to be approved otherwise the work will be a waste, so there will be a tendency to approve these vs. denying them I think this kind of workflow has a conflict of interest between productivity lost vs tendency to approve (so work done isn’t wasted). Some discussion around intentions for MIP6 greenlighting and initial work by CUs to only bring forward MIP6 candidates that governance can pass, vs. just bringing forward any and everything hoping somehow where bad candidates will be weeded out before the final approval stage is probably appropriate.
Which brings me to the next one I seriously was considering voting no on.
Looking at how basically a single delegate basically can greenlight whatever they want here brings up a delegation hazard. I have often wondered whether delegates should only be allowed to have some maximum MKR delegated to them. The idea we could get one delegate with 50K or more MKR doesn’t seem as appealing as forcing this 50K MKR to spread between a number of delegates. More on this later…
Other notes. A 3 day poll came up that I missed due to two family situations. I would hope that in the future we could have every poll have at least a 7 day period as 3 days is likely too short if someone has family or health issues.
I read the discussion here and have long been an advocate for increasing surplus buffer to at least 2-5% of outstanding DAI. One point I found interesting made by @cmooney
Buying while markets are dropping via using some fraction of the liquidation fees is really a great way to continue to burn. I would support a proposal to take some fraction (25-50%) of liquidations and flop with it.
It was the when the whole CU MKR compensation came up and enhanced by the whole legal issues around minting MKR for the compensation vest to cause me to consider altering the MKR buy and burn behavior for multiple reasons. A brief outline of what I have been considering proposing below.
I asked in various places (and now here) whether it would be possible @makerburn to get a chart of DAI the system has earned as a function of time since inception of the MCD system. What I am considering proposing is:
Change when the system flaps MKR to using a signal like liquidations to use DAI profits earned in the period to buy MKR. Once this signal triggers:
Provided DAI earnings are positive and doesn’t put the SB below some low water mark. Take some fraction F1 of DAI profit earned by the system in the period window and allocating it to buy back MKR (call this total MKR bought = BM).
BM is used to fill required MKR vesting schedules for all CUs during the period etc. Lets say during the period the system bought 100MKR but 200MKR is needed to fill the vesting schedules. Then during this period this 100MKR would be split at a 50% level to all vesting schedules and a vesting deficit of 100MKR recorded. If for example the BM for the period was 400MKR then I would want to fill the vesting schedule with 200MKR and guaranteed burn some fraction of the extra 200 (say 50% which would be 100MKR here) and then set aside the remaining 100MKR into a MKR vesting fund to fill any future vesting holes via some vesting deficit filling model.
Doing (1-3) above accomplishes a number of key goals for Maker.
Makes the MKR compensation vesting system - sustainable long term.
Ties all MKR vesting to system profits. When the system doesn’t make DAI - no-one gets any MKR (they just build up vesting deficits to be made up later when the system earns more or partially filled via a MKR vesting deficit fund increased when system profits were high in the past.)
Some MKR is purchased on the market based on the Fraction F1 of the DAI profits rather than a fixed SB buffer limit. This will basically set the MKR price for vesting for the period as well vs. using some made up number based on average price for the period. It will be an actual cost to the system in DAI which matches the DAI value given the the compensation via the vest.
Completely eliminates ever having to mint MKR for vesting schedule.
If MKR purchased exceeds the MKR vested there is a guaranteed burn component.
Aligns the interests of everyone for the system to be profitable. No-one gets their full vest component unless the system earns enough DAI to purchase enough MKR to fill the vest, and then and only then will the system guarantee burning some MKR no matter what the SB buffer level is. (this behavior can be altered if the SB buffer gets too low btw).
If the SB ever hits the high water mark then basically all MKR purchased goes through to vest and build a buffer to vest and some fraction will burn. (this will be a reason to just punch the SB up to a reasonable large maximum value as a % of the outstanding DAI and just leave it there permanently).
Part of the 84K MKR can be put into the vesting accumulator to provide for an initial MKR deficit filling fund.
I voted yes to Ratification Poll for Modify Core Unit Budget, MKT-001 (MIP40c3-SP33) - October 11, 2021. I have a general concern over expenditure growth, headcount additions, CU applications. Put simply all we have here is DAO looking over the larger picture and us basically all doing it on our own. Maker desperately needs an oversight unit which I would honestly prefer being delegate based since delegates are the most informed and the voting DAO the ultimate responsibility.
I voted yes to Ratification Poll for Implementation of DSS Charter (MIP59) - October 11, 2021. Really want to get going with Nexo and other IV users for next 12 months until DAO can get a more global IV solution model constructed that coupled performance commitment with a refundable bond and to think more about how to manage ‘DAI policy’ against or last remaining control knob ‘rates’. This is even more important now that legislators are looking at return instruments where regulators/legislators may take away the DSR knob from the DAO.
I voted [yes to Ratification Poll for Adding Data Insights Core Unit (DIN-001) - October 11, 2021] (https://vote.makerdao.com/polling/QmR7fMc6?network=mainnet#poll-detail) I am excited to see this CU get off the ground and to work with @tmierzwa to produce analytics not just useful for Maker but all other DAOs and to possibly turn this unit into a profitable enterprise for Maker. @tmierzwa has already provided me with governance data I am working to digest to produce a kind of GovAlpha report and responds very quickly to data requests. I am buried in other paperwork at the moment and hope to complete the coding work to be able to put the GovAlpha data into a more report friendly form to produce a report in the next 4-8 weeks.
Maker doesn’t get out of the Impossible Trinity as I have discussed in multiple places.
Maker over short periods can take on the rate risk and doesn’t need to lay off the rate difference.
Given legislators are looking hard at crypto instruments that both define a return and those that make a claim on assets and are likely to come down on these as securities. Let others offer these fixed rate instruments and deal with regulatory uncertainty and burden.
I have nothing against the team here just from the way I am looking at this Maker protocol doesn’t need to recode for fixed rates anything, governance simply has to make a commitment to them and honor those commitments. BTW: There is nothing about laying off these fixed rate instruments that will help us with DAI policy here with respect to the Impossible Trinity issue as DAI can’t be manufactured by anyone except a user with collateral deposited into the protocol (at least for the time being).
I voted [yes to Community Greenlight Poll - CurveLP-stETH-ETH (Curve stETH-ETH LP Token) - October 4, 2021] (https://vote.makerdao.com/polling/Qmd1qpHU?network=mainnet#poll-detail) Unless I am missing something this just looks like another ETH vault but it has return so basically looks reasonable. My concern here is we are going to do this work and find this vault doesn’t mint much DAI but willing to give it a chance.
I voted [yes to Increase the GUNIV3DAIUSDC1-A Debt Ceiling - October 11, 2021] (https://vote.makerdao.com/polling/QmU6fTQx?network=mainnet#poll-detail) - absolute yes here as this fits my ( DAO DeepLiquidity - 1Hive) Thesis where Maker should be looking to add significant MC projects via Token-DAI Uniswap V2 type LP. I am working on a proposal to work with our Institutional Vaults here to encourage them to create (for example) NEXO-DAI UNISWAP V2 LP and Maker to add such a vault so NEXO could pair with DAI and mint more DAI using their own token as an additional way for their users to get return on owning NEXO and for the DEX NEXO trading liquidity to be as deep as possible. Right now there is <3M of total Uniswap NEXO liquidity. Uniswap Info Imagine if there was 100-200M NEXO-DAI LP.
I voted [yes to PaperImperium Supplemental Compensation - October 11, 2021] (https://vote.makerdao.com/polling/QmdmeUjv?network=mainnet#poll-detail) - please see my comments in the thread. Two key points here. I think this sets a bad precedent generally and MakerDAO should consider having a above and beyond recognition grant award that requires a nominator and nominee and 1 supporter or some other model to handle acknowledging and rewarding people for recognized significant contributions.
I voted [yes to Nexo Institutional Vault Onboarding - October 11, 2021] (https://vote.makerdao.com/polling/QmU41X9v?network=mainnet#poll-detail) - While I want to see some changes to details of these IV deals and believe there is an understanding terms on these are likely to change in 12 months I am highly supportive of NEXO. I have been a long time NEXO user and really like what they are doing. They are a great addition and partner to the protocol. I honestly would love to see some cross investing here if it could be done (MakerDAO vote to swap some MKR for some NEXO and NEXODAO do the same). This would assure cross commitments. Expect more on how to develop these cross DAO relationships to Building DAOnetworks - Ideas - 1Hive specifically for Maker from me in the future.
Thats about it for me for now. I am hoping to stay on top of votes and now that I have switched to a Ledger for voting hopefully this will keep my gas low.
One general comment at the end here. I keep wondering if GovAlpha job is to basically vet proposals so they pass governance I wonder what the real job of governance here is after the fact. What exactly are we supposed to ‘stop’ that we might not stop. I have a general concern that the system is basically designed to rubber stamp things once they get through certain governance stages so I wonder exactly where governance is supposed to stop a proposal since once a proposal makes it to polling or executive the expectation is it should pass.
Is the place where governance scrutiny supposed to be the highest on poll discussion? If so we need to formalize this as the place to have the hard discussion, to do the hardest vetting, because once we pass this hurdle the reasoning to say no to something becomes more difficult.
I am also rapidly coming to the conclusion that MakerDAO governance side (from the delegate and governance voters) needs its own CU unit to provide us with analysis and information. It is getting harder to do this from my own seat. The idea I can do proper governance quality assurance and not become a rubber stamp without assistance is growing more and more ludricous given the sheer number of ‘polling’ and discussion activities going on.
I don’t know about other delegates but it is easy to become overwhelmed and just say yes to something because it is easy vs. getting into ‘debate’ trying to find a reason to stop something. It becomes tiring to be the ‘bad guy’ so everyone else can beat up on you just to try to tease out potential issues for the DAO.
A few notes. Was sorry to see @PaperImperium supplimental compensation proposal dropped. It is likely we will lose him and his incredible energy. I believe the DAO can do better by taking .1% of MC or 1000MKR value equivalent and reward all governance participants equally based on governance wallet participation metrics. Use something like a 50% pass through to delegates on this reward and we can both encourage small MKR holders to delegate, and compensate delegates as well as everyone with a linear, vesting reward component related to MKR MC. I believe if we want to compensate for governance participation we should reward it based on what the protocol needs. Assumption here is that delegates that don’t must sufficient MKR will move aside for those who can, and that everyone based on their participation level in governance should have access to same rewards level. delegates presumably will have very high participation so this would be a way for small MKR holders to get governance exposure, earn 50% rewards level and not have to pay gas except for their first transaction.
Beyond that work still continues on:
MKR compensation for CUs (adjusting the current model to align incentives and elminate MKR minting)
A new GovAlpha type report using governance data to track MKR wallet participation and create a wallet importance metric (polls, and executives)
Work on a proposal for growth - An approach for how to double or triple TVL and DAI using existing facilities.
It is difficult to post about how I intend to vote so people delgating their Maker to me can communicated with me before I vote vs. after when some poll cycles are only 2-3 days.
These votes I think are pretty important so I had to really take some time to consider them.
I voted Yes to [ Clean Money Sentiment - October 25, 2021] - I think making a yes signal for MakerDAO to make real world change is far more important than holding back because of issues with the specific details of the proposal. The vision is clear, how to implement it just needs more refinement and I look forward to helping work on shaping how this vision will manifest.
I voted Yes to [ Recognised Delegate Compensation Trial - October 25, 2021] - I have been torn on this. bouncing from abstain, to yes, to no, to yes again. I am aware of the significant conflict of interest in voting yes here. When I personally thought about it as a small MKR holder, even if I wasn’t a delegate I would be voting my MKR as yes on this proposal. Why? Because I think even 48K/yr isn’t that much for what delegates are expected to do and every time I turn my own competing compensation proposal I end up with similar numbers.
My own proposal involves rewarding ALL governance participants a fee for their vote from a rough allocation of 1000MKR/yr value to compensate all poll and executive voters. I come up with similar compensation (from 30-120K/yr) for delegates or governance participants with 5-10K MKR and near 100% participation.
BTW if 1000MKR is the reward value for a years worth of governance (.1% MC cost/yr btw) (2.3M as of today) and 50K MKR is in governance this works out to a 2% return to that 50K, and a .5% return to 200K MKR. I think this is really cheap price for decent governance. BTW 2.3M spread across 10 delegates is 230K/yr at 20 is 115K/yr and at 50 is 46K/yr.
Hence the numbers in the above proposal are probably low and any proposal that compensates all MKR voting in governance on a price per MKRvote is going to land at a similar cost value for the DAO - 2.4-4.8M/yr or 200-400K/month to muster between 50 and 200K MKR to participate in governance.
Last note. I think MakerDAO needs to offer compensation for governance, this is a function only MKR holders can provide and when laid against returns for cost here I think even 1000 MKR value is cheap when compared to the relative importance of the return to the system. 1Hive pays over 10%/yr for HNY holders in celeste (about .5% inflation on total float) to offer themselves up to render judgements on disputes in celeste. It costs people ETH to even vote (I paid $30 in ETH fees just to post the above votes).
I am putting this into my delegate platform first to solicit for feedback before I even try to poll on this.
I have spent a lot of time thinking about a model for governance compensation that is:
includes compensation for delegates
includes a mechanism to encourage delegation of MKR
controllable by the DAO
has a reasonable cost element
rewards directly in proportion to MKR being voted and participation
I believe I have achieved this goal with the following proposal.
Simple governance compensation proposal that aligns and satisfies governace participation goals.
Use a reward bounty per poll and per executive.
delegation split - bounty split equally between a delegate and delegator.
Rewards can be paid out after the poll or executive closes and can be paid in DAI or MKR. The value equivalent should be in in MKR but could also be a fixed value in DAI. I used MKR because it was easier to think about this from a MKR inflation perspective as a system cost and as a APY/ROI on MKR performing a service.
If we take 200polls/yr and 50 executives we end up with 900MKR being allocated for governance rewards with above scheme (or 2.07M $$ equivalent value, not a lot when compared to CUs and given the importance of governance in the system - particular with executives).
What the actual bounties are can be debated. I chose the above numbers because then one can work out math to determine what returns look like.
Some calculations using above numbers to put this proposal into perspecitve.
Return on 50K MKR with 100% participation using above proposed numbers.
maximum .8%/yr return doing all polls (or 400MKR)
maximum 1%/yr return for doing all executives (or 500MKR)
900MKR currently worth 2.07M
50K MKR 100% participation
100K MKR 100% participation
200K MKR 100% participation
I have gas costs at current rate on above at 100% participation to be roughly
2K on polls and 4K on executives.
A number of people have wanted to skew these numbers away from one particular holder getting too much reward and others to get too little. Given the Hat mechanics in particular I believe doing anything other than a fully linear to MKR being voted reward will simply cause people to separate their MKR when what we want to see (this is particularly true) is MKR to congregate. If anything we should encourage MKR to congregate by adding a small MKR size bonus. Skew or no skew in rewards has in general been contentious and it complicates the proposal. I leave this as is due to leave the simplicity intact.
What the above accomplishes.
Very simple easy to understand model for rewards.
Complete easy control over governance rewards as a budget.
Easy straightforwards way to compensate delegates.
Completely fair rewards to all governance participants, shadow or just plain MKR holders.
Encourages smaller holders to delegate MKR
gas compensation for governance participation
MKR gets returns from other protocols for providing liquidity why not in governance. There is sigificant precident for offering a return for liquidity.
The rate of return based on above numbers IS NOT that high.
Should be relatively easy to implement.
If there is issue with delegates or individuals with too much MKR - then simply cap rewards to them (which will only force them to divide their wallets). We can control this for delegates but not for MKR generally. In this way we can control how much MKR a single delegate can control as well as their compensation.
Rewards increase when participation decreases, and decrease when participation increases.
Rewards are only given when a vote is made hence the above model automatically tracks participation.
Rewards for polls and for executives independently controlled.
The above model is exceedingly simple in concept and aligns incentives generally.
The gas, rewards breakeven cutoff is roughly in the 100MKR range which is about right given MKR distribution (80-85% of all MKR is held in wallets with 100MKR or higher). The remaining 15% in smaller amounts likely would delegate. Wallets with below 1MKR I don’t believe would cost benefit the system (cost to enter and rewards distribution costs probably would outweigh the return)
Above numbers targeted 100K MKR participation
The biggest issues around this will be:
Contract implementation for how to distribute rewards in delegation contracts and cost profiles to collect/disribute rewards.
Past politics around governance compensation. (whether to be linear to MKR or not, or whether to do it at all).
Parameter Changes Proposal - MakerDAO Open Market Committee - November 1, 2021 - rate changes are reasonable and will boost revenue by roughly 1M/month.
** Lower PSM Vault Fees - November 1, 2021** - against lowering tin/tout to zero as this is going to crush returns on all DAI-stablecoin lps. People believe this is good, when in fact it is likely to lead to negative market and liquidity implications. Interestingly this move counterintuitively might actually decrease the DAI in circulation vs. increase it I believe we need to go to 20tin/tout and slightly increase the spread.
** Community Greenlight Poll - MDI (MD Irradiance LLC) - November 1, 2021** - abstained becuase I agree with @PaperImperium in that some thinking about how MakerDAO handles greenlight polls is appropriate. I honestly would rather CUs be the ones to bring these forward or stop them. I don’t want to consider things unless one or MORE CUs has co-sponsored a proposal for the DAO.
** Community Greenlight Poll - OHM (Olympus DAO) - November 1, 2021** - I had to think a lot about this poll. I am not convinced Olympus products (OHM) are sustainable at this time. Perhaps in a 3-6 months I may change my view. I also just believe that Maker needs to focus on onboarding collateral and vaults that can lead to B’s of DAI minted with the least correlated risk exposures. The fact that OHM is already using DAI heavily is something to monitor carefully.
** Parameter Changes, Core Unit Budget Distribution - November 5, 2021 ** - I am voting my 5K MKR on on the ** MOMC Proposal, August Core Unit Budgets, Housekeeping - August 6, 2021 ** proposal to attempt to block the current PSM tin/tout set to 0 by taking my 5K away from supporting current Executive and supporting an old Executive raising the needed MKR to pass current Exec to 51.65K MKR.
Reasons are straightforward and as follows:
Setting PSM tin/tout 0 signals that Maker wants DAI price below 1 and when the PSMs empty it is going to swift. We are already down almost 1B in 30 days on the USDC PSM. If this isn’t a wake up call to MakerDAO I don’t know what is.
If more PSMs are added Maker will become the defacto Monopoly stablecoin trading platform where all Maker PSM stablecoin prices (regardless of risk) will trade at $1. USDP and USDC will be the first to have locked prices. IF for any reason there is a market loss event that is traced to Maker price fixing stablecoins via the PSMs it likely will lead to the end of Maker and DAI.
PSM spread to zero will basically eliminate stablecoin trading fees in vaults like GUNIV3USDCDAI etc. I would rather us open up the tin/tout to 20bps and these trading markets to get more liquidity and be more robust than killing stablecoin trading on curve and uniswap in one fell swoop by taking away trading fees. This may take a while for markets to digest but in time it will.
If this still passes it will mean a greater agreement with MKR holders to support this. Hopefully causing people to consider more carefully what MakerDAO gets from passing this, and what it hazards.
Locking DAI PEG through stablecoins was originally intended to be an ‘emergency’ measure but has become the defacto method of choice to maintain the PEG. Liquidity into and out of the sides of the DAI with some spread away from 1 IS critical. We have used low price of 1 and high price > 1 at some point we will seriously want to consider bracketing a bracket < 1 and 1. I have been just advocating we always have a fee away from 1 proper (both tin/tout > 5bps) vs. what this proposes =1 on both sides of the PEG. tin/tout=0 setting will coil up the maximum possible financial energy should the PEG have any real financial reason to deviate from 1.(I have listed numerous ones). Having a spread acts as a financial cushion, LP in pairings acts as the liquidity source(s) for immediate trading.
I want to be clear I am for everything else in this executive. MOMC fee and parameter changes, core unit budget requests (even though I see many of these funding requests being high - I am pleased to see initiatives by various core units to return excess funds). But I feel strongly enough to push those changes to next executive to stop the PSM tin/tout 0 from passing and being enacted.
I don’t like to use the MKR delegated to me to block a proposal but there are times when you are so sure something is wrong that you want to do everything reasonably possible to stop people from doing something that has a great potential to harm their own business and other people’s livelihoods. To be sure if this passes the effect probably won’t happen immediately but when the PSMs are finally drain it will happen quickly and governance will not be able to act fast enough to stop the outflows and a PEG dropping rapidly below 1.
Add WBTC-B as a new Vault Type - November 8, 2021 - voted YES because this supports my thesis (posted long ago) regarding having multiple vaults on the same collateral type to allow markets to decide their risk exposure, rate they will pay and to manage DC. These types of vaults allow for a more staggered liquidation should prices drop.
GUNIV3DAIUSDC-A Parameter Adjustments - November 8, 2021 - voted YES even though PSM tin/tout to 0 over time is going to kill fees here. Mostly because I am expecting the DAI PEG to break 1 - and will bring fees back. The use of this vault is going to depend heavily on whether Maker can maintain PEG at 1 or not and fees.
NS-DROP Covenant Modification - November 8, 2021 - voted NO on these changes. Simple upshot here is that while work is being done to correct issues with Centrifuge structure until the structures are more suitable for Maker (for example a senior secured credit agreement seat) there is a general consensus not to modify these to/and/or extend new credit. There are significant issues going on with RWF in general well that are creating additional opacity making these difficult to deal with.
Recognised Delegate Compensation Increase - November 8, 2021 - voted YES Even if I wasn’t a delegate I would have voted my MKR for this. I believe the work being done by delegates justifies the compensation. I do believe given the level of compensation there should be a solid set of measurable requirements. I am also concerned that there is no cap on MKR that can be delegated to a single delegate.
Executive: Parameter Changes, Return Unused Budget to the Surplus Buffer - November 12, 2021 - Supported Increases GUNIV3DAIUSDC-A DC from 50 to 500M, decreases the LR to 102 - basically going to 50x leverage from 20x. SF decreased from 1% to .5%. I am positive on these types of vaults for multiple reasons. One thing to point out is that this v3 liquidity is concentrated into a very narrow band. If for any reason the PEG drops below this band this LP will earn no fees and people will need to reposition. While unlikely to see a 200bps drop DAI below PEG here could cause this vault to become under collateralized. Hence like all the stablecoin vaults that have stablecoin values PEGGED to 1 create some systemic risk should underlying stablecoin collateral drop significantly below $1 for any reason.
WSETH-A DC increase - very much needed and likely will be used.
AAVEV2-DAI Aave D3M - While there are some hazards at least the protocol is now earning fees using DAI in these DeFI projects. About time honestly.
It was nice to see some surplus budget returned tot he surplus buffer but as can be seen later there are some CU accounting issues to be addressed.
Last notes. USDC PSM down over 250M in past 5 days. Puts us on track to empty by year end. Also concerned over the turmoil going on within the RWA unit around @SebVentures and Cenrifuge slowing down RWA growth
Beyond this we are about to hit top end of surplus buffer and DAI holding at 8B earning over 1% in aggregate.
Maker can fix rates all by itself. It doesn’t need to do this in the protocol
Maker by creating fixed rate instruments increases the likelihood of regulation being applied to the protocol.
Won’t do dink to get us out of the rate issues in the Impossible Trinity
Put simply this particular deal basically gives Deco a huge benefit from the protocol, while the protocol takes on all the risk. No government, no institution would give away so much to get so little and take on such risk. As structured Deco is a bad deal for Maker. This idea that if we don’t do it, DECO will be upset and take their marbles off the table is concerning to say the least. It is as if some inside deal was done here and governance is just supposed to rubber stamp a yes. I have various folks both inside and outside Maker lobbying me on both sides of this deal with valid reasonings. I am still willing to hear a cogent argument for why this is good for Maker vs. what we lose if we don’t do it. I have never liked a business deal which was a lose-lose proposition if I didn’t do it. Tells me the deal is structured badly because in any good deal saying no just means things stay the same (no-one loses - we just don’t gain).
Ratification Poll for the Immunefi Security Core Unit (IS-001) - November 8, 2021 - Leaning to YES here mostly based on discussions with other CUs etc. We need to grow a bit more with manpower and this unit will manage some other key MakerDAO issues. Really want to see expenses come in line. Particularly the MKR vesting since we are seeing MKR being vested for unfilled positions in a number of CUs now.
Rates Proposal - November 15, 2021 - voted YES I have a bit of concern these changes are pretty high (2-4% especially) and will cause some payback but this will give some extra income and give us a good look at change in demand due to rate. Given rate of decrease of the PSM higher rates are in the cards. Balances risk better as well.
I just stumbled across this via this thread. Good to read a more detailed proposal on a topic that’s been widely discussed on a more abstract level. Some thoughts below, even though I think it’s ultimately @GovAlpha-Core-Unit’s call on how to implement this.
Although the proposed incentive scheme seems simple, in reality I think the actual long-term incentives and outcomes are unknown. It’s an interesting situation from a game-theoretical perspective where the total rewards are static but the Maker governance landscape is dynamic—thus the incentives will be difficult to predict.
If we end up doing this, let’s at least start with a trial for a set amount of months. If we commit to this scheme and somehow the results aren’t satisfactory, I think removing the scheme could lead to critique (again, it’s all about the incentives)
I believe this scheme is subject to a power law dynamic that we’d rather prevent imo. @LongForWisdom mentioned a quadratic tipping trial that sounds like an interesting way to mitigate this.
Ratification Poll for Modify Core Unit Budget, RWF-001 (MIP40c3-SP39) - November 8, 2021 - voted YES - This is a budget continuation so no actual changes other than MKR vesting to the CU vs. contributors. I agree with @GFXlabs general assessment statement and recommendation regarding changes to how MKR vesting happens. At this time though I don’t see a strong reason to reject the budget modification. If this MKR vesting is not addressed in the next set of budget cycles I will likely change my vote here from Yes to No.
Ratification Poll for Modify Core Unit Budget, COM-001 (MIP40c3-SP40) - November 8, 2021 - voted YES - There is a moderate increase from 486 to 515K (about 6%) pertaining to travel and events. I want to make a comment here that I would rather see a general accounting CU address these budget issues with all CUs within a report so governance can address the global budget more effectively and have some budget quality assurance checking happening. As a delegate or voter micromanaging budgets at this fine grain is both time consuming and annoying. One thing we can see is that accounting errors can be easily made when every CU has to do all of its own internal accounting. I really want to put into place an accounting metric via an accounting CU that all CUs can follow so they don’t have to spend precious resources for their own internal accounting units. I see this happening generally btw, where CUs will spend time gathering their own data vs. using the data analytics unit and I wonder how much time has been spent doing accounting or analytics work vs. specific CU work.
Ratification Poll for the Immunefi Security Core Unit (IS-001) - November 8, 2021 - voted YES - This proposal seeks to add a CU that includes one MakerDAO contributor + Immunefi (a private company) to manage bug bounty program, opsec, and emergency response planning. I agree this appears to take on responsibilities managed by PECO and that anything we can offload from PECO should be helpful to their productivity. I want to re-iterate with respect to MKR compensation to CUs we should be doing this on a per hire level vs. a CU level and these should not be retroactive to empty positions. I voted yes here because I don’t believe now is the use MKR compensation at a CU level vs. hire level to stall addition of CUs. In the future If this does not change I will likely be voting no on budget renewals.
Ratification Poll for Adding Sidestream Auction Services Core Unit, SAS-001 - November 8, 2021 - voted YES - This is a CU with a pretty high price tag. 1.13M annual budget + about 250 MKR worth about 750K at current market price. Even though this is a rather high budget, I know we will need it to retain productive experienced talent. The basic issue as elaborated above is the MKR compensation again is retroactive, and to potentially empty FTEs which needs to be addressed. In general while I am likely to change my view later as these budgets renew I don’t see this as something to stop the addition of needed CUs.
Ratification Poll for Modify Core Unit Budget, MKT-001 (MIP40c3-SP33) - November 8, 2021 - voted YES This is a request for 6 month budget of 425K DAI. Again there are some accounting issues here with respect to clawing back some overbudget that an Accounting CU unit could help address. Hopefully in time we will get this Accounting CU to help smooth over some of the over/under budget inconsistencies and errors in reporting. We are going to need this both on DAI, on the MKR compensation and operations expenses.
Community Greenlight Poll - SB-frOGI (SolidBlock Red Frog Digital Coin) - November 15, 2021 - voted to Abstain Not entirely sure greenlight polls are useful except to stop protocol work. It is difficult to asses anything about a collateral type before some analysis is made. It would be nice to re-assess how governance greenlight polling. Another general issue on these greenlight polls is that I would like to have statements from all CUs whether and how going forward or stopping a particular greenlight affects them would be helpful.
I am going to reiterate an important point here on greenlight polls on anything.
I really want some statement from all CUs on these on whether/how they are affected by these moving forward or not. I am having a hard time grappling with lack of CU statements of position on these and am getting a growing feeling that there are distinct views, opinions and needs going on within CUs that are not propagating up to the governance level. At some point I am going to make a formal poll regarding a request for CU leads to write up some summary report regarding how pushing forward or not on a particular greenlight poll affects them so governance can have some information from Maker CUs before making their own decision.
Onboarding WBTC-B, Increasing WBTC-A Stability Fee, Change of Covenants for P1-DROP, Offboarding Collaterals - November 19, 2021. - supported.
I am against DROP modifications
the changes in rates wBTC-A going from 2.5 - 4% should give us a good read on pulse of wBTC A users with respect to fees.
ilk.hole increases on ETH (A-C), wBTC-A and wsETH-A were well explained.
Offboarding of BAL, COMP, AAVE, and changes to offboard LRC-A, BAT-A, ZRX-A, and UNIV2LINKETH-A vaults that are not significantly used will save us oracle fees.
Onboarding wBTC-B just confirms my old thesis that multiple vaults on significant collateral types are useful and we can look forward to ETH-D, E, ,etc. and wBTC C, D, E… etc. At some point I expect governance will finally make PSM-A, B, C, D, E which if used with different tin/tout spreads and DCs can by itself create a dynamic PSM spread and fees.
Some color on previous executive.
Parameter Changes, Return Unused Budget to the Surplus Buffer - November 12, 2021 - some more detail on my support of the previous executive.
Increasing GUNIV3DAIUSDC-A DC and changes to LR and SF are all reasonable. I expect at some point the competition between PSM tin/tout 0 with this vault will make it less attractive until the PSMs empty and the PEG drops below 1 and then fees will allow this to be utilized more. I do have some concerns that in adverse market conditions the GUNI bots won’t be able to operate effectively rebalancing these v3 vaults. Time will tell.
wSTETH-A increase likely will be utilized.
D3M increasing the AAVEv2-DAI line - has some hazards but probably a good thing. At some point this should level out. I do find it interesting that with this we can then control external rates thereby allowing a neutralization of rates between Maker and rest of markets helping to modulate liquidity sources/sinks into/out of PSM to deal with impossible trinity rate disparity. Maker also gets additional return using this so finally we can earn return on DAI just by minting and placing it into these protocols.
Was happy to see the 218K returned to the surplus, but I think this highlights budget projection and general accounting issues that need to be addressed.
Add a GUSD Peg Stability Module - November 22, 2021 - voted Abstain due to fact tin/tout set to 0. I won’t try to block these but won’t be voting for them with tin/tout= 0. I am for PSMs with multiple spreads and DC to effectively hard code a dynamic PSM but the tin/tout values need to be > 0. Already elaborated on hazards of locking the stablecoin markets to 1 through DAI via PSMs with tin/tout=0.
Increase the Aave D3M Maximum Debt Ceiling - November 22, 2021 - voted YES While I think there are significant unintended hazard risks, I believe the potential benefits at this point outweigh those risks. Being able to manage DAI return rates by floating liquidity into these protocols to start reducing return I have felt for a long time was a viable option to managing DAI demand. Governance will need to be able to act quickly on these so if it doesn’t already have it a D3M IAM module might be well considered.
Add WBTC-C as a new Vault Type - November 22, 2021 - voted YES here. Long ago I posited that having multiple vaults with different LR, SF, and DCs would be a useful way to allow users to choose their risk tolerance against fees. Given how Maker is going in this direction I expect to see more of these appear to manage liquidation risks, offer users an even finer grain. With 3rd party solutions such vault ‘stacks’ might offer some unique vault liquidation management strategies and customized rates.
I am a fan of burning because DSSVest is going to mint approximately 7500MKR in the next year for CU MKR compensation so we might as well get buying back the MKR out of the way now while the price is low.
I also calculate that at 127M/yr revenue is 2.44M DAI/week so the minimum DAI slated for MKR burn here will be for almost 1.5M/week. This is still 60% of net DAI revenue. We also grow the surplus at 1M/week so by the time we hit 130M (which will take 70 weeks with this proposal) we will have burned approximately 105M DAI worth of MKR - which even at 5K/MKR would be 21,000MKR or 2.1%
Work done to consider adjustments to the flapper almost always centered around either a 50:50 burn to sb growth or 66:33 burn to SB growth. At above revenue growth we pretty much come in at 60:40 even though we don’t take 1/2 of the MKR going to the burner and save it to fund DSSvest.
In principle Maker governance can ‘by hand’ make MKR CU compensation sustainable simply by allowing MKR to be burned.
With regards to burn model. I think it would be interesting to just let the Surplus Buffer fill indefinitely and to use income from things like D3M to buy MKR to burn. The concept here is to tie MKR burn formally to interest on our accumulated SB. as this would be totally sustainable and build the surplus buffer as fast as possible.
Right now the surplus buffer is less as a % of outstanding DAI than before Black Thursday I think general consensus is that we should have this be more like 2-5% of our volatile assets (100-250M) given VAs total about 5B.
Onboarding New Vault Types, Parameter Changes, and Core Unit Budget Distributions - November 26, 2021 - Supported - the only part of this I don’t support is the tin/tout=0 on GUSD which isn’t sufficient to want to stop this proposal. Going to have to wait a few days after we pay 906K CU expenses and start 10M DAI streaming before we start burning again. The burning run ‘felt good’ and took out over 1.29K MKR in 12 days.
The WBTC-C vault type will be onboarded to the Maker Protocol with the parameters below.
Going to have to wait a few days after we pay 10M CU expenses before we start burning again.
To clarify, this executive will pay out 906,805 DAI on execution.
The remaining 9,173,516 DAI will be streamed to CUs, over varying lengths of time. So 10 million DAI won’t leave the Surplus Buffer on execution. So while we may wait a few days to replace the 900k DAI, it hopefully won’t be too long a wait to refill the Surplus Buffer.
Add GUNIV3DAIUSDC2-A as a new Vault Type - November 29, 2021 - voted YES to this. Likely rates here will need to be low to compensate for the leveraging going on. Also it will be interesting to see what happens if DAI should drop below 1 and PSMs exhaust. Probably not a huge risk to the system, but more of a risk to the users levering up here.
One Time Payment to the GovComms CU to Deal with Budget Issues - November 29, 2021 - voted YES to this. It is a minor adjustment due to an accounting error after returning surplus funds to surplus. Shows us that a real accounting unit to at least do quality assurance accounting checking is needed. This is also true of the oracle budgets. Honestly would rather have professionals focusing on budget work than each CU having to appoint one person to do their accounting and budgeting.
I voted YES as the changes are not unreasonable. I do have some concerns we already have vaults not earning enough income to cover oracles in this list. It is likely some of these may be pushed over the edge with these increases. Also drops in GUNIV3DAIUSDC1-A seems a bit extreme from .5-.1%. I have long supported wBTC because I felt BTC was the prime candidate to mint significant DAI. Here we are over 1B DAI from wBTC alone. Hopefully Maker will add ETH/wBTC D, E, F etc vaults to fill the LR, SF gaps to help spread CRs, potential liquidations, and give users more choices of risk and fees.
Add CurveLP-stETH-ETH as a new Vault Type - November 29, 2021 - voted YES I agree with @rune that Maker probably wants to have these staking vaults. The concern here is that liquidity will fragment as more staking services come on-line and we may not get enough fees to cover the oracle costs as time goes on. But I am willing to take the chance to bring these forward to see if staked ETH becomes the new dominant vault type. What i honestly would like to see is staked ETH paired with DAI v2 LP vaults. But the liquidity isn’t there yet.
Liquidations will be disabled for this collateral type.
Delegate Compensation Payments - November
As per these successful governance polls (1, 2) and the ongoing trial of delegate compensation, a total of 35,834 DAI will be distributed to four recognized delegates as detailed below if this executive proposal passes.
I think the GUNI-A vault won’t be sustainable at 1% - time will tell.
Some of the rate changes will probably push vaults into the eliminate category. MANA, UNI. It would be nice when people make vaults at least on oasis a feature to add an e-mail or some contact so people can have ‘a chance’ of being informed of changes to their vaults to be able to take action.
Lastly. Regarding Delegate compensation. Shut my mouth during the CC and have pretty much remained silent until this post on the issue of governance compensation, Delegate or Otherwise.
There are so many points to be made here:
One would think compensation for performance would be coupled. My voting performance 100% over the November period.
The vote coupling formally the 90/90 performance for the compensation was not voted on until end of October and this was the prime reason compensation IS only for November and not going back to october.
There is no formal definition of the performance metric (what time period this covers).
The performance level being binary or having curves that just drop to 0 anywhere is arbitrary.
The idea only delegates get compensated and no-one else voting in governance seems extreme and unfair to everyone else (shadow delegates and others) generally.
There is no distinction between executive support or poll at all with these performance metrics.
I have elaborated two alternative approaches to governance compensation (one posted formally and the other here because I had hoped to get some basic comments from GovAlpha and a few others). It is my impression rather than launch some MIP on the community for approval/disapproval to try to get some pre-MIP discussion going first.
There are a number of other discussions around this topic too numerous to list. Key take away points here is that at no point was there a real discussion regarding the actual goals and the many different ways to achieve them.
Why delegates should be treated differently in governance vs. all other participants.
What are the tangible/measurable goveranance goals and how to achieve them.
Button pushers who may not own one MKR deciding things for those who do own MKR, just to get executives passed, or what?
Getting more participation and input via any other models, snapshot polling of MKR, vaults, DAI holders.
What was historical participation?
Information/report regarding current MKR holders, delegating or not, voting or not.
There also has been minimal discussion about how delegates ‘self elect’, nor time periods or mechanics to garner support, much less any discussion about the significant disparity in MKR delegated and not just how this affects compensation, but also how it affects governance.
Put simply there are basically now 2-3 key delegates with lions share of the MKR delgated and everyone else in governance falls in the wash. I have to wonder will @monet-supply who has 75% voting record - even if he voted 100% in the next 2 months would feel still not earning any compensation. Or worse a shadow delegate who might vote near 100% with 5-10K MKR (I don’t think these are, but how would we know? GovAlpha pretty much ignoring anyone other than delegates in their governance computations, much less give a historical governance perspective).
I know @LongForWisdom was not happy with the outcome that I wouldn’t be compensated in November, and guess what I also won’t be compensated for December because 1 executive vote isn’t going to be enough to push me over. Even though I had 100% participation after a family event that put my wife in the hospital that caused me to miss an executive and 7-8 polls. I honestly don’t remember the details other than some polls only run from Monday to Thursday and if you miss them you miss them. So if someone starts off as a delegate and missed (for any reason) they pretty much are hosed for one or more months until they get their ‘lifetime’ numbers up. Yet someone who happened to start off and do 11 months 100% pretty much could take the last month off and still collect full compensation and since everything only runs 12 months, rinse and repeat the above.
There is no concept of vacation, of illness, or anything else that goes with a normal job considered in these ‘performance metrics’ and in that sense and so many others (with respect to other governance players) are unfair, and inequitable.
I find a general theme with Maker as a broad brush hard, and let the outliers lay when it comes to everything. Rather than focus on providing choices and consequences, do what is simplest from a smart contract perspective or what is easiest… There is this general impression to ignore any other sides of anything, stakeholders included. Vault holders have zero say unless they hold MKR, or participate in forums on anything, same with DAI holders. I suggested long ago to offer a DAI reward to vault holders to answer some polling questions, same with DAI holders. To be sure there is a lot to do at Maker, but each action or inaction by Maker has implications, not just on other communities, but on people and based on the above when changes are made or systems put into place I would like some group, some CU to take on the responsibility of looking at such changes from all stakeholder perspectives.
Frankly I have grown tired of trying to remind this community that its actions have a broader affect and scope than just MKR holders and when I put my vote down to support delegate compensation, while being left out of this, it just tells me do less not more. I think @PaperImperium distinctly felt this and many, many others who probably ‘took it like a man’ and haven’t said a word, some who are still working in CUs, and others who basically have left Maker.
It is my hope that in time MakerDAO grows more sophisticated and empathic about the entire community and not just focus its vision myopically on MKR holders.
For now I am done with this topic, and going to take a general break from thinking and working on Maker ideas and enjoy the holiday times with my family, my coworkers and wish everyone,
Maker Vault owners
the entire Defi crypto ecosystem(s)
and the world
A Merry Christmas, and Happy New Year.
Let us all hope, affirm and pray (whatever you do) for a 2022 that is better financially, personally, and communally for us all.