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

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.

To clarify, by “proposal” I meant “executive vote”. So rejecting is as easy as it gets: you simply don’t vote for it!

I am confused as to what one of those things has to do with the other. It is simultaneously true that delegation will (one hopes) increase voting activity and that, very recently, a rate change seemed urgent, went to executive (with overwhelming onchain polling support), and may or may not pass the executive vote.

Right, so on process I’m clearly glad things can move along quickly so obviously I’m not supporting a reversal on that basis.

On substance I was for the rates change and, if it passes, I hope we’ll learn a lot looking at how the market reacts. Very happy to revisit in a few weeks and evaluate then :slight_smile:

1 Like

I don’t know how we will do that. We are leaving no ETH ilks as a control. We are capturing little time series data.

Let’s stop passing the buck to an absentee voter base. The absence of MKR holders from a 72-hour poll posted by itself without even a debate period on the forum should not be construed as the will of MKR holders.

I struggle to reconcile the DAO’s principles of decentralization and duty to serve MKR holders with a small cadre slipping a poll immediately on-chain when there is no period of debate and they had the opportunity to find the de minimus votes required to pass, while any opposition is not afforded the opportunity to do the same.

Surely you would feel differently if another small group self-styled themselves a PPG and followed the exact same process to double rates rather than cut them in half?

1 Like

To clarify, the passing of the Executive Vote would change the parameters upon its execution. We would need another Exec in order to pass and execute in order to undue the rates change.

So as far as @ultraschuppi 's point on next steps, the most direct line would be having this signal lead to an onchain poll to roll back the latest rates changes from the MOMC. Then if that passed it could then be included in the following exec to “undo” the rates changes.

Might be worth adding that clarification to the poll @PaperImperium, unless you were envisioning something different.

2 Likes

Great question, thank you! So after introspecting a little bit and with the usual caveats about bias etc, I would not feel bad about the process at all, I would hope the executive does not pass, and I would not want to wait a few weeks before discussing lowering rates again. That last part is not in symmetry with my current “let’s wait a bit” stance, maybe for good reasons (temporarily excessive rates can create lasting PR damage whereas temporarily insufficient rates are just some lost revenue) but also maybe for bad ones (more motivation to keep an outcome I agree with than to keep one I don’t like).

So I want to start out by thanking you for raising this as an issue, @PaperImperium, it’s hard to get people invested in the process of governance itself, and it’s always a highlight when someone does, even if it’s to object in some way.

You are correct that the process we followed violated the spirit of MIP46. I’ll go into a little detail about why I decided this was fine in this case a bit further down.


With all this said, if you’re going to setup signal requests like this, please make an effort to present the issue in a neutral and unbiased manner. You have argued towards repeal, and spent no words on arguing the advantage to making this exception to process.

The inclusion of emotionally charged terms and lack of representation of the other side, makes this feel like an effort to convince people to vote in favour of repeal. Signal Requests are intended to reveal and solidify consensus, not to push one side of an issue.


Just to be clear, while I recognize the opportunity for this, none of this happened.

To this, I would argue that this proposal was at least partially a response to the feedback from the previous proposal.

We would put up another on-chain poll, if it passed we would include a repeal in a subsequent executive vote.

Want to push back a bit on this. My presence isn’t a guarantee that we’re doing the ‘right’ thing.

So I want to be clear that I’d considered this issue, and ensured that I informed the larger holders that I am in contact with that the vote existed, and that it reduced rates. I also encouraged them to vote.


So, I should have included my reasoning for breaking the process in the thread in question. I did respond to it, but should have been more clear as to why I felt it was valid.

So I’ll do that now:

I felt it was acceptable in this instance to expedite the process because:

  • Response to the previous PPG proposal did not feel that we had gone far enough with changes - and people were concerned that the delay was resulting in a lack of competitiveness and materially harming the protocol.
  • The mandated actors had also discussed the idea of further rate reductions outside of the PPG and were broadly (though not entirely) in favour. It’s possible that the mandated actors would have pushed something similar if the PPG hadn’t.
  • There was a signal request that commented on speeding up the process, to which I highlighted cutting down the discussion time as one of the optimisations to improve turnaround. Frankly, it felt like a workable idea, and I wanted to see what the response would be.
  • Delays to the PPG turnaround have been highlighted multiple times in the past and we’ve made no process change, again, it felt like it was worth attempting to lean in the other direction.
  • The proposal is just that, a proposal. The PPG group does not have the power to implement anything. We expedited a proposal for a change, not the change itself. The 3 day weekly poll duration is not new, it’s existed for multiple years. If larger MKR Holders felt that it was unsuitable, they have had years to change it. They haven’t done so. Ultimately a number of MKR Holders were present and voted in the poll, others were not. If larger holders cannot check in once a week when they have literally hundreds of millions of dollars on the line, to see if there is something that concerns them even when directly prompted to do so, my sympathy is limited.
  • The executive vote exists as a final backstop to prevent something passing if it is unpopular. Delaying CU budgets for a week is unfortunate and would cause some problems, but those problems can be worked around if people truly do not want this.
  • Additionally, as you’ve stated, there is nothing here that cannot be reversed. Downside is that governance looks a bit schizophrenic. Again, that’s unfortunate, but maybe that encourages people to take the weekly poll processes more seriously.
13 Likes