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Episode 54: September 26, 2019

Agenda

  • 00:00: Intro with Rich Brown
  • 34:32: Recap of Forum Topics with LongForWisdom
  • 42:35: Dai Market Analysis with Vishesh
  • 55:23: Post-Call Questions and Discussion

Video

https://youtu.be/JC2rr95pK-8

Terms

ES: Emergency Shutdown SF: Stability Fee SLP: Secondary Lending Platform DSR: Dai Savings Rate

Introduction & Governance

Rich

Summary & Introduction 00:00

  • The purpose of this meeting is for all of us to communicate, learn from our views, and to understand what's going on in MakerDAO Governance.
  • Today I hope we can have a Q&A session about concerns regarding what might be going on in the community. Additionally, this is a chance we can take to call out where we are lacking and to reinforce the great things about our community that we've been getting right.
  • Give us feedback about the call.
  • DISCUSSION HAPPENS IN THE FORUM

Governance

  • We've been working hard to create a community where people can communicate effectively, where debate can happen effectively, where we can achieve consensus, where we can differentiate the will of the people and the will of the stakeholders.
  • We are inventing this universe as we're going along.
  • I was recently asked a series of questions about what governance means at MakerDAO. I told them I have no idea, but a part of it is that we are building something new here. We're a governance system that is partly open-sourced in culture, loose associations of highly engaged stakeholders getting together to manage a huge and complicated ship. The way we manage this thing is by communication and acting based on our mutual agreements and discussions.
  • It's been a pleasure to watch the governance community gradually build up. We have Rocketchat where real-time conversations happen. We have the forums, where serious governance conversations happen: they are a great example of how our community has self-organized and has created processes around how discussions and votes occur in the community. We have our weekly governance calls, where we broadcast information, work on social cohesion, and we have the opportunity to deal with more pressing issues. In the end, proposals end up on the voting portal, and that's where Maker Token Holders get to make the final decisions.
  • One recent example is the move from linear rate-stepping to exponential rate-stepping, which started as a conversation and is now being voted on.
  • We have a system that works: we have smart people communicating with each other to do things right, for the benefit of this ecosystem.

Open Conversation

  • It's important to differentiate between noise and legitimate signals. Crypto-twitter contrarianism is a sort of "brand," it earns likes and followers and can make a lot of noise. Our community's brand/culture is to be cool, calm, considered, and to do things intelligently in the best possible way that we can to shepherd this protocol to success.
    • We need to understand the role of social media in relation to our project.
    • We need to recognize the risk of being swayed by uneducated/emotional sentiment.
  • People picking at us on the basis of outrage should be ignored. We look for legitimate arguments, legitimate rebuttals, all while we're focusing together on solving the problem.
  • 12:58: Chris Blec: Is this coming from a place where we want to maintain tighter quality control over the conversation in total, or is this about protecting productivity?
    • No, those aren't the main drivers. Firstly, we don't want to control the conversation but rather to remind stakeholders and community members about the reality of noise.
    • I wanted to reinforce that we have these mechanisms in place where healthy and informed debate happens with people who are deeply knowledgeable of the system and who are working on its success, and it's not always such on crypto-twitter.
  • 15:15: Cyrus: I think one consideration is that DAOs, as a class, are in an early state. As a result, they are ripe for capture by bad actors, by mob rule, and so forth. There is a reason we've been harping on this scientific governance meme for so long. It's because we're trying to get our community to support and enforce a proper methodology to run MakerDAO.
    • Our mediums of discourse have been pre-defined, in that we have a process in place to rigorously vet for the best decisions to be made in the system.
    • I think whenever possible, we should always remind people that the only gate-keepers for the system itself are MKR token holders, not random voices, not the foundation, social media, etc. As MKR holders, I think that the community is very open to receiving input. Ultimately, there's a model in place to have conversations about things like centralized collateral.
  • Many people have different understandings of what MakerDAO is, and how the intellectual discourse happens.
    • Scientific Governance, although the term may annoy some, is not a term we are giving up. Maybe it's not executed perfectly, but it's an aspirational thing that Maker Governance is striving for. As a community, we expect reproducibility, evidence, clean data, debate, prudence, integrity in conversation, etc.
  • 21:45: Cyrus: I think once we go through our first Governance cycle in MCD, where we go through re-adding ETH as a collateral, in addition to some of the others, people will become more aware of the process, the models, and the numbers of it all. Hopefully, the public will realize how much careful work goes into making the right decision behind adding any collateral centralized or not.
  • 23:22: Chris:
      1. A lot of the chatter in the past week also involved Rune engaging and even starting many of these conversations. The entire foundation must be on the same page about this stuff.
      1. A lot of my time is spent on social media, I don't think it's realistic to shelter Maker's governance from public opinion. I think our best aim would be to educate rather than control.
    • Rich: I agree with you, Chris, and I hope that's not the impression I gave with how I introduced this conversation. We can't control public opinion. This conversation is more about doing better as a group to focus people on educating themselves about the protocol, the governance process, and the general basis for how we make our decisions as voters.
  • Chris Blec: There's a lot we can do to steer the conversation in a better direction. We should be getting into it and trying to get ahead and above it whenever we can.
    • Cyrus & Rich: I agree with that completely.
  • 31:30: Cyrus: I think this is a reminder to ourselves that we have a process in place that handles any disagreements that arise in the community. It's not that we have these formal processes to be centralized, but rather we put these processes in place to get the most unbiased unemotional procedure to calculate risk parameters, manage the system, and so forth, this is my main takeaway.

LongForWisdom

Forum Activity Recap 34:32

Questions

  • 40:01: Chris Blec: Question about forum polls in general. Signal Request forum threads are becoming more and more critical. I feel that they are not easy to find. Is there anything we can do to increase the exposure of those threads?
    • Rich: yes, there are a lot of things we can do. The community needs to step up. There have been ideas about using twitter bots, email newsletters, and more. The push/pull thing is a hard question to answer.
    • Chris: my thinking was even purely on the forum itself.
    • Rich: Yes, you're right. We can potentially make a signal request category for better visibility.
    • Resulting thread: Using RSS Feeds for forum email notifications

Risk

Vishesh

Dai Analytics 42:35

Santiment Maker Data Graphs about Maker Graphs about DeFi Loans DAI 24hr VWAP Graph

Insights: 42:35
  • ETH dropped very heavily over the last week or so. Initially, we had a run-up of ETH price, right before it dropped back down a few days ago. As the ETH price was running up, there was an increase in activity, Dai supply rose up to 85MM-86MM. Once the price drop happened, the Dai supply dropped back down to where it was before around 79MM-80MM.
  • On the same time-frame, a fair amount of collateral that was added, as the price dropped down, there was even more collateral added as expected. The relationship between ETH price and collateral has continued to hold.
  • The amount of collateral added has continually grown. The amount of collateral removed has grown as well, though the rate at which it's removed has slowed down.
  • Bites/Liquidations recently jumped up, a non-trivial amount. People should be aware of this risk and should check their expectations of ETH price movements.
  • Dai price has been fairly steady above $1, with low variation.
  • In the last 7 days, trading volume has been significantly higher, at around 26.5MM
    • Even between the ETH price movement, higher volumes, and Dai supply movement, the peg has remained steady.
Secondary Lending Platforms: 48:50
  • Recently the borrow rates have kept less of a buffer to the SF than we've seen in the past. An emerging theory is that at higher rates the buffer is naturally larger.
  • Borrow on Compound has taken a hit, likely as a result of the drop in Stability Fees and some large refinances back to MakerDAO.
  • Supply volume has been steady on Compound, while dYdX has seen more growth.
  • The excess supply of Dai on those platforms has consistently grown in the last couple of months.
  • The utilization rate has consistently dropped for Compound since the beginning of August, dropping from the mid-70s to low-mid 60s.

Post-call Questions: 55:23

  • 56:51: What's the next step for the Governance Facilitator role that was passed?
    • Rich: We needed to formalize the role that I am in so that we can replace me with community members.
    • The goal is, post-MCD, once we understand the mechanisms in place for how the community funds its own actors, we will take the template of the Governance Facilitator the community can vote in additional people to fill this role.
  • 01:00:08: When is Oracle mandate going on a poll?
    • Nik: I think it makes much more sense to have a single week where all the Oracle proposals are voted on in parallel. This will concentrate the discussion comfortably.
    • It's scheduled for September 30th, next Monday.
  • 01:01:28: Do you have a summary of the feedback we've received so far on the Oracle proposals?
    • The oracle incentives restructuring got the most attention. It was mostly about getting more clarification about the implementation details.
    • Big thanks to LFW for keeping me honest and digging through the details to get things appropriately articulated.