MKR Holder DAI-gest: Week 17, 2020: Action Required: The State of the Peg
Governance Recap April 23, 2020
MKR Holder DAI-gest is a weekly Maker governance recap that is written by the community for the community. The best source of Maker Community information is through active participation and engagement. This supplemental publication strives to present all relevant facts and remain free of editorial opinion (Big 3 takeaway excepted). The statements made herein are not the opinions or statements of the Maker Foundation.
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Big 3 Take-Aways for the Week:
- Understanding the MIPS framework that is being proposed right now is essential. It is a lot of information to sort through, so take it in small pieces if that will help you to focus and retain the information. Here is a link to an indexed list of all the MIPS (outside the forum). It is the entire framework of an introductory governance framework and collateral on-boarding procedures. You will find the MIP number, title, and sentence summary with a link to the forum discussion. See below for two additional sub-proposals added to MIPS 0 through 12.
- The state of the peg has caused concern within and without the MakerDAO community. Some of the larger Maker holders stepped forward and posted their concerns around the state of the peg directly in the Maker forum. This spurred a lot of momentum in the platform, discussed further in this issue.
- Intention to implementation. The DAO is getting very busy, and thought needs to be given to determining the feasibility of proposals, getting buy-in, and recruiting the appropriate skill sets in the community. Timing is key. The DAO is in need of a project management framework that is effortless and easily integrated into the current systems.
Dispositioned Governance Agenda
- LongForWisdom is proposed, second governance facilitator. He said “Yes!”.
- Wrapped BTC has been proposed for collateral on-boarding.
- USDC Risk parameter adjustment and on-boarding additional stable coins such as PAX and TUSD.
- On-boarding LINK as a new collateral type.
- Self-sustaining DAO: MIPS 0–12 — Ratification timeline and two additional sub-proposals have been shared in the forum.
- System Reserves — Deciding a prudent reserve amount of DAI for emergency events. A forum poll is now open.
- Urgent — State of the Peg — Getting DAI back on soft-peg to a Dollar after it has been trading high following black Thursday.
- SCD shutdown going to Executive Vote on April 24, 2020, three-week delay to follow for a final shutdown date of May 12, 2020.
- Zero bid auction post mortem data evaluation — Maker Man currently completing the data analytics from black Thursday. This part is moving behind the scenes. A report is forthcoming in the next several weeks.
- Public relations consortium — Communication team to create consistent and representative communications on behalf of the DAO and to report meaningful ecosystem sentiment back to the governance community. The team has been having weekly meetings, a first report is due by the end of the month.
- Governance vote cadence — the timing for which executive voting happened for certain parameters. This may be overridden by the MIPS governance cycle.
- Compensating Zero Bid Vault Owners. The poll was affirmative to compensate vault holders. Currently waiting on data analytics from Maker Man before restarting in another thread.
- DeFi Emergency shutdown consortium
- Dark fix — “
- Flip / Flop auction usability
- Maker token authority
- Precedent for on-chain polling. Signaling started to determine the governance community’s feelings about having foundation member proposals require on-chain polling. The forum thread seems to have died.
- GSM delay — raise the delay from 4 hours to 12 hours for enacting Executive Votes, as a safety precaution.- Ratified
- Ranked-choice polling
- MKR Debt Auctions — Completed successfully
- USDC On-boarding
- Deep dive into collateral on-boarding — Presentation to community completed, see forum for the movement
- Governance cycle: MIPS 3 Presented in G and R Call — Presentation completed, see forum for the movement
Governance Polls and Executive Votes
- Lower the USDC Stability Fee from 12% to 8%
- Raise the Sai Stability Fee from 8% to 8.5%
- Lower the Dai Stability Fee from 0.5% to 0%
- Note: This will set the DSR to 0%
Passed on April 25, 2020: Executive Vote Lower USDC SF, Lower USDC LR, Whitelist Oracles, Raise Dai DC, Raise GSM Delay, Deactivate MKR Oracle in SCD
- Lower the USDC Stability Fee from 8% to 6%
- Lower the USDC Liquidation Ratio from 125% to 120%
- Whitelist Set Protocol on ETH/USD Oracle
- Create BTC/USD Oracle + Whitelist Set Protocol and dYdX
- Create ETH/BTC Oracle + Whitelist tBTC
- Deactivate the MKR Oracle in SCD
- Raise the Governance Security Module delay from 4 hours to 12 hours
- Raise the DAI Debt Ceiling from 90 Million to 100 Million
All recent polls are closed and represented in the most recent Executive Vote. Further information can be found here.
Governance Hot Topics
State of the Peg
Since the Black Thursday event of March 12, 2020, DAI has consistently been trading above the one Dollar price soft-peg it is supposed to maintain. Sometimes grossly over peg by over ten cents. In recent weeks it has been slowly trending back to a Dollar but has not quite gotten there.
Confidence has not yet fully returned regarding the recent market volatility. Also, people are holding on to stable coins due to market fears. This has caused a serious lack of DAI liquidity, creating high demand, and affecting the peg.
Prices this last week ranged from one to two cents above peg. Paraficapital, a larger corporate Maker holder in the governance community posted their concerns in the forum and related the sentiment of worry in the ecosystem regarding DAI being off the peg. This brought about immediate discussion and action regarding monetary policy and collateral on-boarding. The most recent passed Executive Vote contains monetary policy to make minting DAI more lucrative from USDC. Also, some exciting new collateral types are being considered for use in the MakerDAO platform. More on that next…
WBTC as a new collateral type?
WBTC also is known as wrapped Bitcoin is currently being evaluated by the Maker governance community to be on-boarded as approved vault collateral. Wrapped Bitcoin is Bitcoin that is held by the WBTC DAO and then tokenized 1:1 on the Ethereum (ERC-20) blockchain. Bitcoin on the Ethereum blockchain you ask!? It’s already here, you can trade it on the https://Oasis.app .
Many players in the DeFi ecosystem are excited about this step. Bitcoin is the most popular and most valuable cryptocurrency. While there is a small amount of WBTC use on current DeFi platforms, it was stated that people have been waiting for Maker to adopt WBTC as a collateral type. It was also said that using WBTC as ERC-20 collateral is the primary use case for ERC-20 Bitcoin. Forum links are listed below for this subject.
Other Collateral Considerations
In addition to WBTC, LINK is being considered for on-boarding as approved vault collateral as well as additional stable coins such as PAX and TUSD. All of these collateral options are hoped to help bring back sufficient DAI liquidity and help return the DAI price peg to exactly one Dollar. Again, see below for the forum links regarding these new collateral types.
MIPS 0–12 Due for Initial Polling; if Passed Moving on to Executive Vote
MIPS 0 through 12 has been a high focus subject in the governance community for the last few weeks. These are the first documents that spell out a governance and collateral on-boarding framework for a self-sufficient DAO. This is the beginning of the two to three-year process of handing full control of MakerDAO to the governance community and dissolving the foundation. The very nice flow chart below shows the two possible scenarios for approval or rejection of these MIPS in the Timing Governance Poll. Forum links can be found below for further information.
Single Collateral DAI shutdown is very close. An Executive Vote for shutting down SCD is supposed to be posted on or shortly after April 24, 2020. There will then be a 3-week delay for shutting down. This will give time for people to close out their vaults, and hopefully drain the migration contract.
Stability fees are going to be set to zero to incentivize the closing of vaults. If you are still holding SAI as of the time it shuts down, you should be able to redeem your SAI for ETH via the migration portal at https://migrate.makerdao.com
Forum Activity and Signaling
Trending Issues in the Forum:
- Action Required: State of the Peg
- [WBTC] — WBTC Collateral Request For Comment
- The Ratification Timeline for the Initial 13 Maker Improvement Proposals (MIPS) and 2 Subproposals
- DAI:ETH UNI-V1 Oracle Discussion
- Sequential Process for SCD Shutdown
- Proposal BTCUSD Oracle (Set Protocol, dYdX)
- Should we increase the ETH-A debt ceiling by $10 million in the executive vote on 24/04/20?
- Liquidity Measures — Idea for New Vault Type
- MIP0c12-SP1: Subproposal for Core Personnel Onboarding (MIP Editor)
- USDC vaults VS arbitrage reservoirs
- [USDC plus additional Stablecoins] Risk Parameter Request for Comment
- [LINK] Risk Parameter Request for Comment
- System Reserves
- Signal Request: Precedent for on-chain polling
Weekly Governance and Risk Meeting
Here is a guide from MakerDAO about becoming involved in Governance. The meeting is held every Thursday, 17:00 UTC. During the postmortem and corrective action phase of the recent crypto market prices and resulting fiasco there has been a daily call. This is expected to drop to two calls over the next week. Please check the forums for information related to ad-hoc governance and risk calls that may be happening.
- Understand the issues that are discussed and governance themes that get explored to build a healthy, secure, Maker Platform.
- Get info on how to connect by phone or webcam.
- Explore meeting archives.
- May 1, 2020 DeFi Full-Stack Virtual Summit (virtual)
- May 7, 2020 Ethereal Virtual Summit 2020 (virtual)
- May 11, 2020 Consensus: Distributed (virtual)
- May 14, 2020 Blockconf (virtual)
- May 15, 2020 PolyFinTech 100 API Hackathon 2020 (virtual)
- May 18, 2020 Crypto Asia Summit (Virtual)
- Sep 22, 2020 Money 20/20 Europe 2020Amsterdam, NL
- Oct 21, 2020 ANON 2020 Vienna, AT
- Dec 9, 2020 Paris Blockchain Week Summit Paris, FR
- MakerDAO Community Events Calendar
- Weekly Community Development Meeting — Tuesdays 09:00 PST
- Weekly Governance and Risk Meeting — Thursdays 09:00 PST