[Signal Request] Raise Threshold For Emergency Shutdown Module

Overview

The Emergency Shutdown Module (ESM) operates as a condition that once met, allows anyone to trigger Emergency Shutdown via the End Module. Currently, 75,000 MKR would need to be burned in the ESM to allow for Emergency Shutdown.

Signal Request

There is a strong possibility that a single MKR holder has enough MKR to reach the ESM threshold without assistance. This means there is a risk that a single holder could be compelled or choose to trigger Emergency Shutdown. Removing this ability likely places that holder in a position of reduced risk, as well as making the protocol overall more safe.

This request is to determine whether to increase the ESM threshold. It is not believed that any single MKR holder has in excess of 100k MKR at this time.

Pros

  • Makes shutdown less likely
  • Reduces risk to any single holders that have the ability to trigger shutdown
  • Reduces risk to protocol of a single holder being compelled through legal or other coercion to trigger shutdown

Cons

  • Makes it more difficult to trigger shutdown in the event of an emergency

Effect

In the event this signal is successful, an on-chain poll will be presented with the parameter changes specified in poll below.

Should the ESM threshold be raised to 100k MKR?
  • Yes (to 100k MKR)
  • No (currently 75k MKR)
  • Abstain

0 voters

This poll will close on December 28, 2021 (2021-12-28)

3 Likes

Would it be wise to instead add a second condition to trigger shutdown, such as having at least 2 signatures from Gov Alpha approve the shutdown?

No, because that arbitrary check would (1) disenfranchise MKR holders who are the only voices able to effectuate ES, and (2) empower Gov Alpha by placing them in position to approve or disapprove ES.

5 Likes

It was always the case that one entity or a few entities combined could trigger the ES. This was also kindoff the purpose of this module, that few (or one large entity) can actually trigger it in the case of emergency. In the case of a hostile trigger, they would obviously lose their MKR tokens. While I agree that protocol evolved, and the amount of collateral deposited and debt issued grew significantly, which would be a logical metric to look at for increasing the ES threshold, I don’t understand what changed in the MKR token holder structure that would lead to a need for increasing the ES threshold.

This one entity or a group of entities would need to have some kind of monetary or political gain from triggering the ES. Wouldn’t it make more sense for them to try to cast some kind of rogue spell, and if it would be prevented, they can still trigger the ES, if the whole purpose is to destroy or damage the Maker system. If the current executive has about 75k MKR, it is likely the cheaper way of damaging or exploiting the system by trying to push a new hostile spell, so lower ES threshold doesn’t really change the situation here.

Why did you specifically pick 100k; assuming that one entity or a group has more than 75k and less than 100k, can’t they get someone onboard to have more than 100k again, or slowly acquire more tokens by buying them over time on unrelated addresses. They probably also have capital in other forms, which would enable them to borrow an additional 57k MKR from Aave.

This signal request brings up the facts that always existed, and doesn’t really offer a concrete solution, as the possibility of an hostile/forced ES trigger by a single entity or a small group would still remain, while on the other hand, creates a more difficult situation when we will have an emergency.

Otherwise, I do agree that the ES threshold can be increased, but not because of MKR whales, but because the protocol has grown so much and the value of assets in the protocol is now much larger than the value required to trigger ES. Is there a perfect value for the threshold? I don’t think there is, except logical ones, like higher than available MKR liquidity on lending markets.

4 Likes

Would echo the thrust of @Tosh9.0 's point here. Ideally this threshold and amount of MKR at risk deter non-emergency use, one of the things that adjusting the threshold could help with. Additionally, it will add overhead in the event that one of the signers walks away from Maker, or our Core Unit or Facilitators are offboarded.

This doesn’t mean we shouldn’t explore ways of making the ESM better/more secure, just that we would not be asking to be on a signature list at GovAlpha.

4 Likes

Thank you to everyone who voted in this poll. This is scheduled to be voted upon on-chain on Jan 10

4 Likes

@GFXlabs @Recognized-Delegates

Just a heads up that PE has informed GovAlpha that it will not be possible to include this proposal in this week’s executive, in the event that the Signal Request passes on-chain.

This is due to the complexity of the smart contract changes required to adjust the ESM threshold.

Tentatively, if the on-chain vote is in favour of this proposal, we will aim to get it included in next week’s executive and will confirm this nearer the time.

cc: @Derek @cmooney in case you have anything else to add.

6 Likes