MIP57: RWA Committee

MIP57: RWA Committee

Preamble

MIP#: 57
Title: RWA Committee
Author(s): Gregory Di Prisco (@g_dip)
Contributors: @mrabino1, @williamr, @Viktor_Viktorov1, @ElProgreso
Type: General
Status: RFC
Date Proposed: 2021-07-09
Date Ratified: n/a
Dependencies: n/a
Replaces: n/a

Sentence Summary

MIP57 formalizes the creation of the Real-World Asset [RWA] Committee, its scope, and a process by which MKR holders can modify its membership and internal procedures.

Paragraph Summary

This MIP formalizes the creation of the Real-World Assets [RWA] Committee, its scope, and a process by which MKR holders can modify its membership. This committee was spawned out of the Parameter Proposal Group created by SebVentures. This committee presents a new scope which better accounts for the qualifications and conflicts of its membership and addresses the need for strategic research and guidance by the DAO in regards to Real-World Assets.

Component Summary

MIP57: RWA Committee
This MIP outlines the scope and purpose of the RWA Committee.

MIP57c1: Member List
This component defines the membership of the RWA Committee.

MIP57c2: RWA Committee Quorum
This component defines the quorum needed for the outcome of votes to be considered valid.

MIP57c3: RWA Committee Pass Threshold
This component defines the percentage of votes that the committee must have to consider a vote passed (e.g. simple majority).

Motivation

Most of the discourse around Real-World Assets in the Maker Protocol has revolved around structural, procedural and geopolitical implications rather than a risk analysis of the assets/asset originators. The scope of this committee is to separate these “high level” issues from the specific deal analysis and to provide blanket guidance that applies to all Real-World Assets in the protocol. This committee will not have any explicit power in the governance process, contrary to most Core Units, but will be limited to making recommendations that may be “approved” by MKR holders via on-chain polls.

Specification / Proposal Details

MIP57: RWA Committee

The RWA committee will consist of individual members that are ratified by the MKR holders and each member may cast one vote when internally processing recommendations. Any member may bring a vote to the floor of the committee. A quorum of 66.1% or more of the membership must be present in a committee meeting in order for the outcome of a vote to be considered valid and a pass threshold of 50.1% will be required for a vote to be considered passed. A stalemate will proceed to an on-chain poll in the following monthly cycle and have the normal rules of a poll applied to it. The committee will meet, at a minimum, once per month and will coordinate this timing internally. The committee will limit its scope to making recommendations to the MKR holders in the following areas:

  1. Structural requirements for Real-World Assets in MakerDAO. E.g., recommending the use of an independent administrator/director in an SPV

  2. Geopolitical implications of Real-World Assets in MakerDAO. E.g., recommending maximum jurisdictional exposure and jurisdiction-specific policies

  3. Business strategy of Real-World Assets in MakerDAO. E.g., recommending a global minimum stability fee on RWA in order to provide a buffer for an increasing DSR

MIP57c1: MIP57 Committee Member List

This subproposal lists the individuals permitted to vote as part of the RWA Committee and can be amended by modifying the Member List through this MIP.

The original Member List will consist of:

MIP57c1 subproposals have the following parameters:

  • Feedback Period: 2 weeks
  • Frozen Period: 2 weeks

MIP57c1 subproposals must use the template located at this link. This template is considered ratified once this MIP moves to Accepted status.

MIP57c2: RWA Committee Quorum

This subproposal can amend the quorum needed for the outcome of votes to be considered valid.

The original quorum will be:

  • 66.1%

MIP57c2 subproposals have the following parameters:

  • Feedback Period: 2 weeks
  • Frozen Period: 2 weeks

MIP57c2 subproposals must use the template located at this link. This template is considered ratified once this MIP moves to Accepted status.

MIP57c3: RWA Committee Pass Threshold

This subproposal can amend the percentage of votes that the committee must have to consider a vote passed (e.g. simple majority).

The original threshold will be:

  • 50.1%

MIP57c3 subproposals have the following parameters:

  • Feedback Period: 2 weeks
  • Frozen Period: 2 weeks

MIP57c3 subproposals must use the template located at this link. This template is considered ratified once this MIP moves to Accepted status.

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@Planet_X @ElProgreso @prose11 @mrabino1 @Akiva @ultraschuppi @g_dip @_LS @Cmo @omahalawyer @roollie @Allan_Pedersen @DavidJeng @Viktor_Viktorov1

I put you on the initial list because you are listed as the member of the current RWF PPG. If you don’t want to be in the committee, please let me know. Also please let me know if I’ve accidentally left anyone out that was already in the RWF PPG.

Additionally please let me know if any of you would like to be listed as contributors, I put out a message in RC about this but I’m not sure that everyone saw it.

EDIT: Added @PaperImperium as I forgot he was in the original group

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Thank you Greg, Matt, William R, and Viktor for putting this together–nice job!

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Can I add you as a contributor since you helped to review? I wanted to add everyone but I didn’t get many replies on RC.

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What would you think of starting for a month or two without being under a MIP? This will allow the community to see the type of outcome of this committee. Those recommendations can be passed as Signal Request anyway.

For instance, I always said that 2% is the minimum SF we should have for medium/long-term RWA. Nevertheless, we might want to think otherwise by investing in T-Bonds. We are also working with a prospect with a very low SF, but what we think MakerDAO might recognize of strategic importance.

For structural requirements, we mentioned having an independent director since January. Another simple piece of advice is to avoid investing in any RWA where the cost of the structure is higher than the expected return. Structural is mostly legal and I fail to see how a committee can be a better help than a law firm review. The same applies to geopolitical implications (which probably need a Geopolitical CU? Who knows).

While a PPG is there to process facts and unknowns to make a decision (on things to propose as to reduce Governance bandwidth), I fail to see the value of this committee, especially without resources (and it would be a CU otherwise).

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I think this is a good idea as long as we can all agree to keep the membership static for that timeframe? I would note that by the time this is actually voted on, given the length of the governance cycle, the committee will have been operating for over a month - so this might be a moot point.

Fully agree with this btw, and I think it’s a good example of the kind of recommendation this committee can work through governance.

I think the key here is that the feedback is supposed to be very high level and probably out of the scope of what a lawyer would do. Independence and cost are two important concepts that didn’t require a lawyer, and if more concepts like this come up this committee can be here to address them. One I can think of off the top of my head is operational security - i.e. ensuring that best practices are maintained and Dai is not lost in transit. I think the MKR holders would appreciate specific guidance on how to implement that and this committee could provide it.

From my perspective, a Core Unit is “special” because of the ability of its facilitator to expedite the governance process outside of filing a stand-alone MIP. For instance, you as the Facilitator of the RWF Core Unit are able to have direct input into executive spells (or at least direct input into the process that a non-facilitator does not). If a group doesn’t need that, I don’t think they should be a Core Unit, hence why I kept this at a lower level. I think the description of the committee pretty clearly outlines its value, not to mention that the impetus for creating it is coming out of previous lapses in the onboarding process. I’d also add that the idea to convert the PPG into a committee isn’t exclusively my idea and was born in the RWF Committee call we had last week, so I would welcome the others with me on that call to help articulate its value proposition.

The one thing I am a bit surprised about is that I put this draft up in the #rwf-committee channel on rocketchat last Wednesday and you were the first person to provide feedback. Did you not feel like that channel was sufficient for providing the “fail to see the value” feedback that you’ve provided here? It’s not a big deal, but I would have liked the opportunity to see if anyone else felt that way and to preemptively incorporate the contents of this post into the MIP.

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Please remove me. I was interested on joining the PPG - the idea of this committee does not (yet?) make sense to me

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Just some thoughts

  1. If the mandate/task described in the MIP is not already part of the CUs associated (remember, we can easily have multiple RWF Coreunits) - why should we centralize it to one specific group of people? The beauty of PPGs is, that we can have multiple of them caring about overlapping parameters.
  2. I don’t think a MIP should be bound to a list of people (even if it is just an initial set), it should be generic in a way multiple committees could appear (see PPGs)
  3. Actually I think all topics covered here should be in the responsibility for the RWF-CUs anyway - no need to form another group.
  4. Right now this commitee looks more like a group to control the RWF-CUs - I don’t think this is helpful.

Please convince me I am wrong on those points :wink:

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My comment is not aimed at providing feedback to improve the MIP but to state my position publicly.

Thanks for the questions @ultraschuppi , I think you’ve identified some clarifications that I can edit into the MIP.

There’s no centralization at all! There can be 10 RWA Committees if people would like to start them. I’ll also add that this committee is a step removed from a PPG because it will not be recommending any parameters (someone should probably start a RWF PPG to fill the gap).

The MIP isn’t “bound” to the list of people (which has just been copied/pasted from the original PPG list), as governance can modify the list at any time. Once again there can be many RWA Committees if governance desires.

This is where I think we’ll just have to agree to disagree. But I do want to take this opportunity to clarify the guidance process in case that’s where the disagreement lies. Right now the RWF CU makes decisions within their mandate and applies those as a binary outcome via an onboarding vote (or at least this is how it’s worked in practice). The process this group will follow is to separate conceptual issues from specific applications and provide guidance to MKR holders and CUs. To process this guidance, we submit votes to the MKR holders to ratify them. For instance, if we should say “All real world assets should have an independent director,” this would go to an on-chain vote and MKR holders could accept or reject it. The RWF CUs can do this as well, but as you mentioned above there’s nothing wrong with redundancy.

This could not be further from the truth. My points to refute this are as follows:

  1. This committee can’t control anything, it is quite literally limited to providing soft guidance that can then must be accepted or rejected by the MKR holders.
  2. Even if the committee puts out guidance, the RWF CUs are free to ignore it.
  3. The current RWF team was invited to have representation on the committee and chose to not participate so that the committee could have greater autonomy, but they can always join via MIP57c1 at any time.
  4. There is no limit on the number of committees that can form to provide guidance and, if they wanted to for whatever reason, MKR holders can shut this one down at any time by removing all names from the member list

To summarize, this group will not be commenting on specific RWA applications and will keep its guidance to high level issues that impact all RWA in MakerDAO. There’s a history of these issues being overlooked and therefore I believe that a group like this will be beneficial to the DAO. It has no autonomy to enforce its guidance and will be submitting every item on which it provides guidance to be ratified by MKR holders (either as a bundle or individually, depending on input from the governance facilitators in how they think this should work). This is not an exclusive group, anyone can join via subproposal or create a separate committee.

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so essentially what you propose is having a similar way like PPG but not about parameters but about “higher level topics”?

in this case it might make sense to phrase it like the PPG-MIP and just let those commitees form in a similar way?

of… do they need to be acknowledges formally by an onchain poll (which is not the case for PPGs)?

Trying to wrap my head around how this would work.

So the committee meets once per month and produces recommendations that go through an off-chain vote involving the members. After that happens, is that recommendation binding? Does the recommendation need to go to an on-chain vote to become binding? What happens if the recommendations are not followed?

The value of this group is to create universal guidance around any RWAs that come to Maker while leaving the individual deal analysis in the hands of those specialized teams and so for that reason I am interested in seeing this further discussed and developed but I do wonder if existing CUs can create these recommendations themselves?

Yes, I’d say this is a primary difference. Since these topics are high level and globally applicable to RWA, I think it’s appropriate that the MKR holders ratify the guidance.

See the above replies to Schuppi. Everything goes through MKR holders after the committee votes, and things are only as “binding” as guidance can be.

They can and I don’t think the committee and CUs are mutually exclusive. I do think that committees are able to attract broader representation than a core unit (which is quite specialized), which is why I’m excited about this experiment. I’ll add that the stakes are very low if this doesn’t work out, but there’s an asymmetric opportunity to contemplate and bring to light issues that are otherwise difficult to coordinate on.

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maybe it is just me, but: if the onchain approved guidance things are just as binding as guidance can be what exactly is the value here? especially if CUs can just don’t care at all.

In the end MKR holders are going to judge the performance of CUs based on the value they add to the protocol / revenue they generate for MKR holders.

It feels a bit like a “Software Engineering Standards Committee” that tells @Protocol-Engineering that they need to care more about cohesion (just making up a random example) - but in the end the CU just does not care and continues delivering what they deliver. And then imagine this guidance being voted on onchain :wink:

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I think you’ve branched into “what is governance?” I think it’s an interesting conversation to have and I tried to scratch the surface here. I’d be happy to pick up the conversation in another thread.

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well, that was not convincing enough for me to support this MIP… thanks anyway :wink:

i guess it would make a lot more sense to me if this would be structured like MIP46

  • the MIP should provide a framework, not a new instance / list of initial people
  • new instances of those committees do not hold any power (similar to PPGs, just proposing stuff) - so no need to formally ack them onchain, make it easy to spawn them

but even if this is solved, the main point remains: this is just a debating club, not actually tasked or empowered. it does not solve any problem (at least I don’t see it yet) that a RWA-related CU cannot solve - so no need to formalize it through a MIP

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I honestly think we just have a difference in opinion as to the role of Core Units and the mechanics of governance. I tried to outline my thinking in my “What is a DAO” post, so that’s why I pointed to it. It’s a shame I couldn’t win you over but nevertheless I appreciate your feedback and engagement! :pray:

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I lean towards Schuppi’s view as well.

  • Do MKR voters really need to be involved in voting between recommendations of this group during stalemates?
  • I would also support redoing this MIP in a MIP46 style. Do MKR voters need to be the ones to vote people into this committee? If we don’t vote in the members of rate proposal groups, why should we vote in people to this RWA recommendations group?

Though I disagree with Schuppi that it is “just” a debating club, and for that reason it is somehow not very valuable. I think with the right membership this group can produce impactful guidance that will help us navigate the RWA business wisely, so I am in favor of the existence of such a group.

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I will counter with, why don’t the MKR holders vote for the members of PPGs? I thought they did tbh. I would advocate to change that.

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i did not say it is not valueable - the whole forum is built upon debates.

but if it is not having a special mandate yet speaking of enforcing anything - why even formalize?

no one is stopped from expressing opinions, forming groups, pushing signal requests to onchain - totally without any special construct like described in this MIP.

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