Staking part 2 - collateral waiting period and community responses
After an investor has onboarded a potential collateral type, a waiting period follows where MKR holders might challenge the onboarding as the staker might have tried to onboard unsafe or unwanted collateral.
During the waiting period no DAI can be drawn from Vaults containing the candidate collateral type. The community is informed through the contract that a new candidate collateral type has been added and during the waiting period the community can challenge the onboarding .
In this period entities called Hunters will check the collateral type. An informed reader might have noticed that the role of the Hunter is the same as that of a Maker risk team, but in reverse. Under the voting system a Maker risk team finds and evaluates collateral before bringing it as a proposal to the community. A Hunter finds already staked collateral, evaluates it and if after the evaluation the collateral type is found wanting seeks the community for approval to have it removed.
If no action has been taken on the part of the community the collateral type is automatically approved at the end of the waiting period and DAI may be drawn from Vaults containing this type of collateral.
This process is in other words the opposite of the voting process where the collateral type will have to wait for approval. Under the staking system the collateral will be automatically approved unless the community takes action to remove it.
A Hunter is any entity checking the range of onboarded or potential collateral in order to find dubious collateral types. These collateral types could be scams or in breach of Maker legal or ethical guidelines or have incompatible hardforking or distribution mechanics. Once a Hunter has found one, arguments are prepared and the case is brought to a community vote. If the Maker community votes in favour of the Hunter, the collateral type is invalidated and the Hunter is awarded the staked MKR, but not any accumulated DAI. This in order to incentivize early countermeasures and not let more time pass so more fees are accumulated. Any DAI goes straight to some system fund. In order to keep the Hunters honest a small ‘Hunters stake’ (1% of staked MKR?) should be applied, the Hunter loses this stake if the voting goes against him or her. This to prevent ‘nothing to lose’ spamming of the governance system.
Due note that there is nothing that prevents the community from removing a collateral type at any time, the advantage of doing it during the waiting period is of course that no DAI has been issued yet. Alternatively, one could argue that the role of the Hunter should be limited to finding bad collateral after the waiting period is over, during the waiting period the community as a group should act as concerned token holders. In that case if the collateral is deemed unsafe the staked MKR would be distributed to the community members participating in the voting process.
With the staking process differing substantially from the voting process, the system consequences will be explained in the next part of this series.