The Dawn Following the Darkest Night
MKR Holder DAI-gest: Week 13, 2020
Governance Recap March 26, 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:
- For those that utilize the services and products on the MakerDAO platform, risk of losing all of what you have invested is possible at any time. Such as anything material. Extensive analysis and resources are spent on building safety and security into this complex machine proactively, but it is impossible to plan for every scenario. Investing of any kind requires due diligence, upon which it is the investors responsibility to locate data that is accurate and pertinent prior to investing.
- Information is abundant on MakerDAO.com, however, not easy to find. This week I am launching a survey campaign to gauge perception of MakerDAO information ease of access, clarity, and usability. Please take a moment to complete this four question survey. Link to Survey — Please Complete. It’s Just four questions and a funny ending slide
- In the midst of uncertainty and fear surrounding the recent black swan, MakerDAO achieves a huge milestone: Control of the Maker Token is 100% turned over to the Governance group. MakerDAO is consistent and accomplished when it comes to the pursuit of full decentralization. Steps forward in uncertainty create a culture that can adapt and even thrive when things get high-pressure and high-stakes.
Governance Polls and Executive Votes
Passed on Mar 27, 2020, 09:34 UTC with 69,157.36 MKR. Executed on Mar 27, 2020, 16:03 UTC.
- Allows the stuck debt auctions to move forward for sale.
Opened March 26, 2020
- Lower the USDC Stability Fee from 20% to 16%
- Lower the Dai ETH Debt Ceiling by 10 million to 90 million Dai
Polls that ran March 23–26, 2020 are the current parameters up for vote in the current Executive opened March 26, 2020.
Recapping Last Week’s Events
The MakerDAO foundation members along with governance and risk members worked very hard to respond to a system security event. MakerDAO foundation members have been working very hard to analyze, model, and understand the sequence and implication of what happened. Results will be published when they are available. Outside consultants are also being brought in to help analyze and prevent such an occurrence. If you ever doubt the efforts invested in making MakerDAO safe for all, I urge you to watch the four governance and risk calls from last week. Quick action, bright ideas, and level heads prevailed.
Vault Holder Compensation
A lot of strong activity and effort this week was put into the continued post mortem analysis of the black Thursday Swan-a-thon. Forward momentum is very strong in terms of analyzing how to best move forward. There were some vault holders that may have possibly lost collateral beyond the requirement to repay their debt. The governance group is trying to balance favorable perceptions, listening and supporting, asserting zero liability, zero precedence for implied liability or contributory negligence claims. The MakerDAO platform was operational and fully functional, as it was intended, when these perceived losses occurred. In the mid-19th century, when pioneers were settling the West in the United States, risk was the way of life in hope of greater opportunity. This is all part of the growth process. The end result will be a stronger, healthier, more stable platform. The MakerDAO Foundation team and governance community is committed to learning all there is to know about the causality of this glitch to ensure system security.
Debt Auctions Blocked in the DAI Credit System
A minor glitch has caused around twenty flop auctions to become stuck in a state preventing auction start. This is a minor issue. Stability is not affected. As a work around, Governance can enact Executive Votes which will unfreeze these stalled auctions, and allow the affected 1 million Dai to be raised for system debt settlement. This Link will take you to the beginning of a detailed presentation of the system problem and technical overview. Or, take the fast lane to the forum signaling thread. Links to issues details are provided as well as a poll for handling voting logistics with regards to the backlog of auctions.
Monetary Policy actions and their implications on MakerDAO
The last couple of weeks have heard this sentiment on more than one occasion: Do we know how monetary policy actions have truly affected other parameters of the ecosystem? What systems are in place to record and analyze data that is a result of monetary policy? It has not been a formal agenda subject, but concern and questions are coming up seeking to understand what we really understand and how we’re reaching conclusions that are consistent and correct. There is agreement of the need to further explore this issue, however, it has thus far been tabled in favor of more pressing issues.
Now forming: a small but well represented consortium of MakerDAO platform and outer ecosystem stake holders to develop formal guidance and framework for using the system Emergency Shutdown. Check out details in the forum thread, ask questions, or cast your hat in for consideration in being a participant. WANTED: IF YOU KNOW ANYONE PLEASE PASS ALONG THIS COMMITTEE FORMATION: Seeking third-party ecosystem stake holders. This includes representatives of DEX and Dapps based around Dai or Dai variants. Emergency Shutdown affects any and all Dai holders or variant integration’s in serious ways. Participation from some third-party operational teams is sought and highly appreciated.
SCD shutdown is still out in the future some months, but beginning to take formal shape in Governance
This forum thread begins turning the shutdown of SCD into a reality. Highlighting a draft of the technical steps that will be taken to shut down single collateral Dai, formal process and procedures are evolving. If you are holding any Sai, now is the time to head over to the official migration site and turn them into Dai. If you still have an open SCD vault, repayment or conversion to an MCD vault will ensure the safety and security of your assets.
The new USDC collateral type that was approved and implemented by MakerDAO governance was selected based upon two very specific use cases:
- Being able to generate Dai liquidity for flop auctions. Dai is in short supply as recent market price scares have caused Dai holders to hodl on to their Dai for dear life.
- Dai Peg Arbitrage.
An evaluation of the 10 largest USDC vaults was presented which brought some insight into the use of Dai backed by USDC. It is estimated that approximately 50% of USDC held is being used to provide Dai liquidity. Two larger vaults have been traced back to other DeFi platforms. Having Dai generated and held within the system is ideal. The governance community is discussing the creation of two USDC based collateral types: USDC-A and USDC-B. Each variant will have monetary policy settings that incentivize their respective use case.
Questions arose around the availability of USDC backed Dai metrics. While there is no formal dashboard or availability of metrics yet, actionable data is being presented in the weekly governance calls. The forward movement to dive deeper into the metrology of USDC and respectively backed Dai was highlighted and assured as a priority in the governance group.
State of the Peg
Constrained Dai liquidity has been persistent as crypto market fears linger. Dai holders are less motivated to sell because of the stability offered by Dai during these uncertain times. The peg has been running at a spread of (L)$1.02-(H)$1.04 over the last week. Although high, this price point has been stable which is a good sign.
Dai that is created by Eth-A remained flat as price instability fears remain in the forefront of people’s investing fears. A slightly higher peg is to be expected while Dai demand is high and supply stays constrained. Completing all of the flop auctions is a high priority to help relieve the current Dai liquidation crunch.
Sai migration slowed this last week in comparison to weeks prior. Again, market fears are the suspected cause of the slow down in Sai to Dai conversion. An approximate total of 1.4 million Sai were migrated. Debt ceiling reduction to limit supply will continue.
Forum Activity and Signaling
Trending issues not mentioned here include:
- Compensating zero Dai bid vault holders
- More on SCD Shutdown
- Suggestions on updating the current signaling guidelines
Weekly Governance and Risk Meetings
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 7, 2020 Ethereal Virtual Summit Online
- June 16–18, 2020 Money 20/20 Europe 2020 Amsterdam, NL
- Dec 9, 2020 Paris Blockchain Week Summit Paris, FR
- Autumn 2020 Copenhagen Fintech Week 2020 Copenhagen, DK
- MakerDAO Community Events Calendar
- Weekly Community Development Meeting — Tuesdays 09:00 PST
- Weekly Governance and Risk Meeting — Thursdays 09:00 PST