Meta: Coordinating Collateral Due Diligence

With the recent blogpost on collateral onboarding, we (the community) are in a position to help make some progress towards the release of MCD. The following quotes are taken from that blogpost.

The Maker community must complete a number of governance tasks, particularly those concerning the ratification of new collateral types, before we can launch MCD.

Request for Proposals: Documents are published to the MakerDAO forum for debate and feedback.

We anticipate that this cycle of proposal, evaluation, debate, and ratification will take approximately one month to complete for each bundle of assets.

There are seven proposed tokens in the first wave of collateral types for MCD. They are:

  • Augur (REP)
  • Basic Attention Token (BAT)
  • DigixDAO (DGD)
  • Ether (ETH)
  • Golem (GNT)
  • OmiseGo (OMG)
  • 0x (ZRX)

Edit: Based on Cyrus’s reply, it appears that the on-boarding guide stuff has mostly been completed already by the Foundation. We absolutely still want volunteers with the same roles in order to contribute information for the fundamental analysis, though.

More information about exactly what we need to research should be coming in the next few weeks. Currently the plan is to spend a 1-2 weeks gathering volunteers and organising ourselves, followed by a research/collation effort over ~4 weeks. If anyone is very eager to get started, there should be enough information to go on between cyrus’ post and his qualitative risk model slides from a few meetings ago.


A call for volunteers

Much of the research effort can be completed by anyone with access to the internet, and a bit of motivation. There is also work to be done in organising, writing up and presenting this information in a clean, consistent and digestible way.

I suggest we try to find community members willing to fill the following roles.


Revered Sleuth Herder - [Token] Division - Seven, one per collateral type.

  • Creates and maintains a forum thread that contains organised and well-presented information pertaining to a specific proposed collateral type.
  • Will agree upon a template to follow with the other Revered Sleuth Herders, such that everything ends up in the same style.
  • Co-ordinates and directs Super Sleuths with the aim of avoiding duplication of effort and completing the required sections for their assigned collateral type.
  • Not required or expected to do the research themselves (though they are welcome to help)
  • Should be actively adversarial towards their assigned token. This is important, do not volunteer for this if you do not believe you can take an appropriately pessimistic view.

Super Sleuth - [Token/Area] Division - As many volunteers as we can get.

  • Gathers information about the collateral types.
  • Can be both collateral focused (everything about REP) or area focused (Gini co-efficients for each collateral type).
  • Reports said information in the collateral thread(s) where the Revered Sleuth Herder(s) can find it.
  • Emphasis on providing sources. We need to be able to verify information if you are unavailable.
  • No opinions without supporting data/evidence.

The central threads I am describing will also serve as a location for discussion about a specific collateral type.


Experimental use of polling/signaling, tick all that you agree with.

  • This all seems very sensible. Hurrah for coordination and useful activity.
  • I want to volunteer as a Revered Sleuth Herder.
  • I want to volunteer as a Super Sleuth.
  • I have some concerns which I will detail in a comment so they can be discussed.
  • I have no sense of whimsy and I want there to be respectable job titles.

0 voters

5 Likes

This seems good, and I think we do need something to push the various individual collateral research forward.

I would like to volunteer as ‘Revered Sleuth Herder’ for DGD. I am a large holder, but I also am very negative on the token as currently evolving, so I understand if you all feel there’s too much bias, but I do know a decent amount about both token and community and feel confident in coordinating the effort here.

4 Likes

I can put together some chain analysis plots. Open to ideas on what to investigate

1 Like

IMO, two of the most helpful things community members can do vis-a-vis due diligence is digging up information on 1) liquidity/order books and 2) technical concerns / vulnerabilities / bugs in the contracts (especially down-the-road “quiet” issues that would not necessarily surface for a while).

3 Likes

This is an awesome idea, and I would love to see this gain traction. We would all be extremely appreciative for any help the community puts forth for collateral evaluations and due diligence. Regarding the onboarding guide specifically, a lot of the information has already been gathered by the Integrations team for the initial collateral set, so I wouldn’t actually spend _ too _much time on that yet. We can discuss how to share this in the governance call tomorrow, and I want to minimize duplication of efforts. But of course, this is merely the beginning of the process. Over the next couple weeks, we’ll be releasing more qualitative frameworks and scoring guides which will be the meat of the analysis. It would be awesome to see this coordination effort take off and have it help risk teams with their evaluations.

For example, a few elements that go into the fundamental analysis could be quality of the code, sentiment analysis, or competition. Having a community-led effort to round up some of this information (with sources!) would be a fantastic help. There will be some more clarification when documents are released in the coming weeks.

But we are nearing the time where we get to all start discussing (and arguing!) about the pros/cons of certain collateral types. Helping fill in the blank spots of the onboarding guide and getting ourselves in the mindset of collateral evaluations would be advantageous for us all and a great first step.

4 Likes

I’ve updated the main post to take cyrus’ reply into account. The current focus (next few days) is on finding as many volunteers as possible. At the moment it looks like we could use some more Revered Sleuth Herders, perhaps the position needs a more impressive-sounding job-title.

If there is anyone that considers volunteering and ultimately decides against it due to my presentation of the roles, any insight you can share as to what put you off would be valuable to hear. Feel free to PM if you are not comfortable sharing, I promise not to try to rope you in.

On the other hand it has been literally a day since I put this up, so probably it’s fine to just wait and see if anyone else volunteers.

It’s been a week since I last checked in here. Last I heard from Cyrus, we’re 2-3 weeks out on getting a solid template for what the due diligence section will look like.

I’ve created a channel in the rocket chat for discussions related to this. You’re not required to be there, I’ll make sure anything essential is copied onto the forum, It’s there to make co-ordination and discussion easier.

The call for volunteers is still open. At the moment we’re in a holding pattern waiting for a good template to start filling in.

1 Like

Why in the world is DGD on the list but DGX is not?! DGX has some value (custodial gold), DGD has none (IMO).

This has probably been mentioned elsewhere, but there are two reasons for the initial token selection:

  1. The list has been compiled quite some time ago mostly on a strictly technical basis, as in: which tokens play well with the MCD collateral assumptions from a strict software-technical point of view? For example: does the token contract implement standard ERC20 behavior? From this perspective, DGX is a complicated contract that requires significant technical analysis, DGD is not. To further narrow it down, a very simplistic criterion was used related to the market cap of these tokens at the time.

  2. The reason why DGD was even considered in the first place, is the underlying assumption that any token that passes some really basic test (for example: is not a scam), can be added as collateral to the system. Any further qualitative assessment would then be reflected in the risk parameters. So tokens with a low quality as collateral get conservative risk parameter values, rather than excluded from the system.

As @rich.brown has mentioned, we had a chicken and egg problem so we needed to start with something. It is now up to the community to take advantage of the technical work that has already been done for these tokens, or not. If DGD gets voted out, not a lot of work will be lost precisely because of the technical simplicity of the token. The foundation dev team will then happily focus its attention elsewhere.

1 Like