[Signal Request] Repeal "Parameter Changes Proposal - MakerDAO Open Market Committee - June 28, 2021"

Overview

A parameter change was proposed and put into a poll which dramatically affects the cash flow of MakerDAO. These changes are currently in the executive awaiting passage, and there is no way to organize opposition to these rate changes short of campaigning against the entire executive.

These changes are drastic in nature, and should be opposed on grounds of both process and substance.

Given:

  • The proposed changes to rates are large, with a 42% reduction in rates for our largest ilk and similar across nearly all Maker ilks, representing millions of dollars in lost revenue on even a monthly basis,

  • The changes were put into an on-chain poll the very day they were proposed,

  • There was no attempt to informally poll the community about these changes,

  • The changes were put into an active poll at a time when no other new polls were created,

  • These changes were immediately put into a poll exactly as proposed by a group that is not vested with any power by MKR holders,

  • That this group violated the very MIP46 it is organized under, which repeatedly names discussion and feedback as a requirement, and clearly states, “Sufficient time must be given for discussion,”

  • The stated rationale behind these changes is to grow DAI supply, and DAI supply daily sits at new highs already,

  • That revenues have been rising for Maker, indicating that no rate cut is necessary to maintain competitiveness with other protocols,

  • That the only alternative to this signal is to fight the current executive proposal, which includes other necessary things,

…then MakerDAO members should loudly and forcefully vote YES in the poll below.

Maker is known to stand for decentralization. Decentralization is not a small group of unelected members putting a poll on-chain the very same day as their proposal is announced. That small group was given time to wrangle votes, quietly plan and discuss amongst themselves, and present a plan immediately on-chain. That no opposition could be organized in such short time should not be surprising.

Whether you agree or disagree with whether Maker should drastically slash income even in the face of a growing supply of DAI and revenue, any civil person can agree that even a self-appointed group organized under MIP46 is still bound by its own terms of formation to allow “Discussion - Parameter Proposals must be presented with enough of a feedback period to give the community time to respond and discuss the proposal. Questions, concerns, or queries must be answered if brought up by the Maker community, and feedback must be considered before finalizing the proposal.”

While surely unintentional, Maker cannot leave intact this deviation from our solemn aspiration of decentralization and due process.

**Vote YES to repeal “Parameter Changes Proposal - MakerDAO Open Market Committee - June 28, 2021”

Should Maker Repeal "“Parameter Changes Proposal - MakerDAO Open Market Committee - June 28, 2021?”
  • Yes
  • No
  • Abstain

0 voters

This poll will run for 7 days (until Wednesday, July 14, 16:00)

1 Like

It appears to me that you did not read this:

Please correct me if Im wrong.

The changes were submitted under the parameter proposal group organized under MIP46. It clearly states that in the proposal’s own title.

Well I think “not vested with any power” is not completely accurate.

Regardless, you may consider opening your own PPG?

1 Like

Tough call Sir, tough call.

In one hand if I proposed to Jaime Dimon that we take a 42% cut I’d be out of a job tomorrow morning. On the other hand, this PPG has good intentions and is composed of trusted Community members.

Also, I do believe the lack of whale MKR voters speaks volume–but I do worry that Core Unit Budget Distributions will be needed and a political point of view will hamper the ability to get funding to CUs. But then again–the voting is stagnant. So, what can you do. I had to vote “NO”.

1 Like

To be clear, this signal exists so that the current executive does not need to be opposed, even with a component in it that violates Maker’s own due processes.

Voting YES would simply repeal the aberrant parameter change once this signal completed our valued governance process.

1 Like

Understood. But is that even possible? I would like to hear from GovAlpha if such is doable.

I mean you make some valid points/arguments. I do think we the community had an opportunity to speak up but we have not, for a reason. That reason being that we seem to be content with the lack of due process. Or, perhaps exhausted.

I can tell you that I have heard some old school MKR token hodlers and former voters who would tell you today that it was exhausting in the old days to figure out what Stability Fees should be. And that is one of the primary reasons they are no longer community members…

3 Likes

It’s a rate change. I’m not sure why they wouldn’t be reversible. It would just be resetting the rates to what they are today.

1 Like

I read through the different posts and it doesn’t seem that there is an actual economic analysis outlining the pros and cons of this proposal? Maybe I’m not looking deep enough but if someone could point me towards something that would be great.

1 Like

I will not comment on the specifics of your opposition to the process but by and large, there is going to be a tradeoff between fast reactions and consensus building. It may be worth discussing that independently if you wish.

I believe the following points are the non-process related arguments - correct me if I should have added any of the others from your list.

The rationale behind these changes was indicated both in the original post and a reply later in the thread. I am quoting both here.

The Open Market Committee has identified the concerns of the community around tail-risk with USDC as being a material discussion point on the topic of the longevity of MakerDAO. As a result we have concluded that the optimal course of action is to increase DAI supply (from non-PSM ilks).

The OMC has identified moving the USDC off the books as a primary goal.

I think both posts were fairly clear. It is not to grow DAI supply, it is to grow DAI supply from non-PSM ilks. The rationale has been clearly described as concerns around the amount of USDC on the books.

Technically, depending on how many users choose to mint DAI at the new rates, this statement might not be true. However, even if it is, the supply increase of DAI is needed to ensure that DAI remains on peg without (mis)using the PSM. For much too long, the PSM has been used as rug under which we’ve been sweeping our core DAI supply problems. DAI is taking lots of reputational damage because it is seen as a USDC wrapper and this is not an entirely false picture. I am glad that we’re finally waking up to this issue and correcting course.

This is really disingenuous now, @PaperImperium. You know better than most of us here that long term prospects can be in conflict with short term goals. Exclusively prioritizing revenue at the expense of a huge existential risk is not the right measure of competitiveness.

For the reasons above, I disagree completely with this and have voted no.

4 Likes

My sense is the community has higher objectives than optimizing for short term profits.

To me this signal comes across as campaigning against this execute, or at least seems likely to have that effect.

This statement seems crafted to suggest the group lacks legitimacy. But as you later note the group is formed in accordance with MIP46, and happens to also have multiple members who are mandated actors vested with power by, and therefore accountable to MKR token holders.

This criticism is not entirely unfair in this case but completely overlooks MIP46c3 which states:

My sense is that as USDC backing Dai has recently skyrocketed, the community does want urgent action (consistent with maintaining 1 Dai = $1.00) to dampen this phenomenon.

The Parameter Changes Proposal in question clearly identifies this concern and objective:

As noted above, the rationale is not just to increase the Dai supply, but to increase it from non-PSM ilks.

I think it would be a mistake to optimize stability fees for MakerDAO profitability, which aside from process seems to be the main issue this signal is targeting. Vault holders should be comfortable knowing that MakerDAO does not exist for the purpose of extracting rent.

Additionally, understanding how vault holders react to rate changes is still in early stages. Substantial rate changes create the risk of overshooting but also opportunities to gather that data.

I am voting NO on this signal request.

4 Likes

just a formal point:

Is this even a Signal Request if it is not having a clear next step? What should happen if “Yes” gets the majority? Should someone fork the Mainnet excluding the exec which is up for vote after the onchain poll passed with 12868 MKR in favour and 2.6 MKR against it?

3 Likes

Some times its bit expensive for minority. )) Something should be done in that direction. Besides to that according to Wyoming Law it should be 50% Quorum on protocol changes. Of course you can intrepert one way or another. But at least it should be 50% jf voting power from vote contract. Legal advice on that issue is a must. Tommorow finally somebody go to court and say !!! This people were responsible.

Besides to that. There are no alternative options were proposed. Budget proposal could go separate in Exec. I dont think somebody think that core units shouldt be incentivised. (Taking to the account the fight with Link)

Just to make it clear and simple. My voting power 40 Mkr. Voting power of my followers 500 Mkr. If we want some stability in Mkr holders and a Quorum. We should have some other way to vote other than on mainchain. Some times it cost 100$
And As I expected earlier that exec vote will stay on hold. First reason is market bearish santiment. Second - Mkr price manipulation expectations.

And finally we should say great thank to Instadapp farmers which are responsible for increased Dai supply from PSM. Shall we booster farming even further. Yes we should. But lets disscuss the outcomes.

I am against changing it because there is the poll before it and people voted on chain.

However, I do agree that the rate change is a concern regarding the protocol security. And I do believe this group has a lot of pressure from the community.

The reality is by introducing the PSM we opened the Pandora box. We now have some flexibility and more room on the rate setting.

Before the PSM, the problem was easy, do we maintain the peg or do we cut the income. The first one was the priority.

Now, the peg is not an issue as we traded it for the usdc risk ( less visible), so the priority has changed. And rates are a touchy parameter to change therefore what ever we do we will have this conversation over and over.

Unfortunately, I can’t see how we can secure the protocol and not having this conversation again without an automated rate adjustment directly embedded into the protocol.

I think the exact same measures apply now but it’s actually more clear what should be done.

If the PSM USDC increased over the previous month, that means that DAI would have been, on average, over peg had there been no PSM. If the PSM USDC decreased, we know DAI would have been, on average, under peg.

This should make rate setting easier and make it even more clear what direction we need to move in wrt rates.

Let’s first add that the idea was already discussed with the community earlier in the DeFi Summer by MakerDAO post. There was wide support for the idea and this support was used as an input.

A Governance Facilitator is in the group so I would say the process is followed.

Maybe you should understand the difference between DAI supply and DAI demand before (for which the imbalance is handled by PSM-USDC).

The decision of the MOMC was not an easy one. You can certainly say we were too slow to react last month (and I agree we were, but easier in hindsight). Maybe too quick this month? Maybe. Is it better than 9 months ago? For sure.

If you want to change the process, do it, if you want to propose another PPG, do it. But I don’t see the point in Signal Request to bypass the work of people mandated by the DAO to do it (and this PPG was never challenged by MKR holders if I’m correct and contains 3 mandated actors).

8 Likes

Not long ago, a big argument broke out because process was being followed too tightly (according to some, me included) which resulted in governance inaction when action was clearly preferable. I remember being scared that Maker would turn itself into a sclerotic org, with layers of rules capable of blocking obvious choices.

Maybe that PPG vote was too rushed, maybe not, but I’m happy that it could happen at all. At the current margin, informal governance processes should go faster.

The point of rules on this forum are, I think, just consensus-building. Actual executive power rests in the hands of MKR voters. They can reject any proposal. They can also create, vote on, and pass proposals without going through this forum or even the governance portal. So as long as there is rough consensus I think it’s basically fine to submit executives, and my perception on this PPG vote was that consensus was there.

Finally on substance the rates change can be reversed with another executive. It’s not like a new collateral type was rushed through. And the PR impact of changing rates a little too fast does not worry me.

4 Likes

It is difficult to reject a proposal that is simultaneously birthed and polled — many do not even check here in a three day window.

We will with one breath say that governance participation is so low and quality so lacking that we need to convince holders to delegate their votes, and then with the other that ramming through a proposal that violates its own MIP is ok?

That is exactly the purpose of this request.