Special Governance and Risk calls Tuesday 4/14 and 4/15

Hey guys,

The Interim risk team will be doing additional governance calls this week on Tuesday and Wednesday at 1pm EST (one hour later than the normal Thursday time).

The idea is to do a few consecutive calls so there isn’t any significant interruption in our presentation of the risk work. They will be recorded, of course.

Tuesday Agenda

Wednesday Agenda


Hi! Will the video from Tuesday be posted here?

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Part Deux


Couple of questions:
#1 Can we add a link to these slides to this thread?
#2 Is the code that was used to run the monte carlo simulation open sourced?

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Slides should be up in next few days. Code will be open sourced I think early next week


Thanks for the great presentation btw. Really enjoyed it!

Damn! Missed these calls… Didn’t get notification at https://forum.makerdao.com/c/governance/gnr/8

@cyrus is this going to be an ongoing call, focused on risk and data analytics? Or just a one-off call this week?

Gonna bump this question again to see if there has been any updates to the above. @cyrus ?

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Hey all. Link to slides: https://drive.google.com/file/d/1yn48G027fVzVU45HzCbPEP2DKnYl0oJk/view?usp=sharing

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Do we have any idea regarding timelines on when the code used for the simulations in the slideshow might be open-sourced?

Second follow up:

There was a bit in the presentation where we came up with a value of the “Economic Capital” of MKR dilution i.e. how much money can we expect to generate via maker dilution.

There we talked a bit about the methodology used and sort of just stated that we think it is in the ballpark of $28MM. We did not for instance concretely show the calculations that were done to arrive at that $28MM number. Would the risk team care to elaborate a bit on how we arrived at that number and possibly go into the various inputs into that model in a bit more depth?

Some of the more curious inputs that I see are:

Any elaboration on this front would be greatly appreciated.

Hey Andy, thanks for questions. Please see this link which includes DCF calculation and inputs we used. You can see that $28M used in presentation was just one example used from range [7, 35] that we obtained using different inputs. Some inputs are very subjective and hard to forecast and this is why we believe community should crowdsource them to obtain reasonable estimate for MKR dilution capacity (you can either decide for one from range of inputs we used or simply try using different ones by changing numbers in input cells)

Regarding your question about MKR governance premium: the idea was that when MKR has 0 rates (as currently) and potentially no cashflows from penalty fees, DCF would in such case yield $0 MKR dilution capacity, which certainly isn’t correct. This is because we believe there is still some substantial value in MKR as governance token, despite scenario of having no cashflows. We call this value governance premium that is added on top of value obtained from DCF. The issue here of course is that there is no good model yet (to my knowledge, although this methodology may be interesting) to value governance premium and therefore we used some intuitive range.

If you have any further questions please let us know.

P.S. If you are going to play with different inputs, please make yourself a copy of sheets file. Feedbacks are very welcome.

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Thanks so much for the explanation here.

I may come back with more questions but this is a meaty enough topic that it probably deserves it’s own thread.

Only outstanding item to me here is the VaR model that was used for these simulations.