MKR - from voting to staking - part 4

Staking part 4 - system consequences - Maker governance
Maker governance in relation to collateral management is possibly were the staking model has the most drastic advantage. Consider a scenario 6-10 months from now where Maker has onboarded 10 collateral types. Under the voting model this has taken roughly 30 rounds of community discussions and 40 voting events. With the ever-changing landscape of crypto there will be an additional of 10 community discussions and another possible 40 votes (based on a review every six months) just to keep the present collateral types up to date (debt ceiling, specific stability fees etc). Needless to say this will create wear and tear on the voting community, but most importantly - this will simply not scale.

With staking however the voting overhead will be drastically lower, the community just votes to decline the collateral types it does not want. There is absolutely zero collateral type maintenance, when the staking contracts expire the collateral type is removed from the pool of valid collateral types and will have to be reintroduced all over again. This makes for a continuous expansion and contraction of the collateral types available, most of it without any governance necessary unless some scamcoin is introduced and the community must mobilize to dispose of it.

Community members are encouraged to think about a scenario a couple of years in the future when Maker has grown substantially and there are 1000 collateral types in the Maker ecosystem. Some might say Maker will never reach this level but the fact is that 1000 collateral types is just scratching the surface of what is theoretically possible. The maintenance overhead of such collateral pool, taking a 6 month period between updates, will amount to (10002/52) a minimum of 38 community discussions and (10002/52*4) 154 community votes per week. Needless to say this is not even remotely workable. Most likely even 100 types of collateral will be too much for an onboarding system relying on MKR holders in a gatekeeping role as the sunk cost of invested time for active voters will increase towards a full time job without compensation.

The voting system has an upper scaling limit based on the number of voting processes necessary for onboarding and maintaining new collateral, just based on the present throughput a rough estimate of 100 collateral types as an absolute maximum for this system.

The staking system has a vastly higher upper scaling limit due to the much lower requirement for voting. If the staking system requires no votes for collateral maintenance and only one round of community discussion and one community vote for removal of a collateral type, the upper limit of such a system is only determined by how often someone tries to scam the system by trying to get worthless collateral onboarded. Countermeasures include a safety factor in the formula calculating the required staking capital, a safety factor in the required waiting period or an additional safety factor in the minimum staking amount. In other words - under the staking system there is no upper hard cap in terms of collateral types, only a speed limit in terms of growth.

This end the series of articles arguing for using staking to onboard collateral.

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