Is MakerDAO, the #1 DeFi protocol, about to be scrapped? That’s what’s at stake in the flurry of votes this week on the collateralized debt platform. Its members are deciding whether to spin off various operating units, including the Real-World Finance Core Unit, which drives its strategy of soliciting loan business from TradFi’s partners. So far, members are overwhelmingly voting to create new, separate units called MetaDAOs. Voting has been ongoing for a week and will close after seven days.
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Big moment
This is a big time. But wholesale restructuring of a protocol as influential as MakerDAO is not easy. However, the protocol, which has a TVL of $7.4 billion, is facing one of DeFi’s most challenging issues. How do you efficiently manage and develop a cooperative organization that lives on a blockchain? And now, the community is making a big call on how to strike a balance between business imperatives and DeFi values. In addition, other projects are closely following the MakerDAO experience. Rune Christensen, co-founder of MakerDAO and former CEO of the Maker Foundation, is driving these potential changes. He laid out much of his plan in Endgame, a script published in May. Christensen criticized the decentralized governance that has sustained MakerDAO since its founding and which was dissolved in July 2021. In addition, he said voter apathy and competing interests make it difficult for Maker to manage its financial arrangements.
MetaDAOs
To remedy the situation, he proposed turning several of Maker’s core units into MetaDAOs. Thus, each MetaDAO would release its own token. At the same time, it would be overseen by voting committees that operate independently of Maker’s broader DAO-based governance process. Adopting the MetaDAO framework would allow Maker’s core units to develop and pursue their own growth strategies. This is without being hampered by competing faction interests within the vast MakerDAO community. In particular, Christensen stated that decentralized governance is preventing Maker from building more integrations with institutions and businesses that operate with real-world assets. “The governance processes and political dynamics that have developed in Maker are not compatible with the reality of effectively processing complicated real-world financial deals,” he said. A poll proposing the separation of the Basic Real-World Finance Unit from Maker drew near-unanimous support. More than 99.9% of votes support the change. If approved, the Real World Finance unit would be revamped into a MetaDAO, separating its activities from the DAO that governs Maker.
unit of happiness
In addition, members are also evaluating two other proposals to offload the Maker Event Core Unit and the Strategic Happiness Core Unit. Both polls drew 90% support on Monday. The Central Events Unit is tasked with organizing MakerDAO branded events and ensuring the project has a physical presence at crypto conferences. Meanwhile, the Happiness Core Unit is responsible for driving community engagement through memes, merchandise and online content creation. MakerDAO is a secured debt protocol that allows users to mint their stablecoin, DAI, against deposits. The project has recently expanded its revenue streams through partnerships with projects and institutions dealing with real-world assets such as corporate debt. While Christensen previously lauded Maker as “the most well-developed real-world asset pipeline in the industry,” he now fears that excessive exposure to RWA could leave the project vulnerable to regulatory attacks following the U.S. Treasury Department’s crackdown on the Tornado Cash. The sanctions resulted in the Centre, the consortium behind the centralized USD Coin stablecoin, blacklisting 38 wallets associated with Tornado Cash that held 75,000 USDC. With USDC accounting for more than a third of Maker’s Total Locked Value (TVL), Christensen urged Maker to reduce its exposure to centralized assets and make plans to “float” DAI against the dollar.
Greater interdependence
But while his reactionary plan drew support from many in the MakerDAO community, the project returned to a path of greater interdependence with centralized assets. A survey proposing to deposit 1.6 billion USDC on Coinbase Prime to earn an annual yield of 1.5% currently has 80% support. The community is also showing early support for a proposal by Gemini that offers to pay a 1.25% yield to Maker. But that’s as long as the protocol holds more than $100 million worth of GUSD stablecoin. Maker’s Strategic Finance and Growth core units were instrumental in negotiating the proposals. At the same time, Maker also began investing $500 million in US Treasuries and corporate bonds earlier this month. The protocol also approved a $100 million DAI vault for Huntingdon Valley Bank, a 151-year-old financial institution, in July. While Christensen’s stance on real-world assets appears to be igniting functional divisions within the Maker community, a MakerDAO representative said that The Defiant co-founder is now a member of the community like any other. As such, his proposals are subject to the usual governance process.
social channels
“Although he was the founder in his previous role, Rune is a member of the community like any other DAO member,” he said. “His comments on social media are not official statements or plans of action. Instead, they need to go through a lengthy proposal and governance process (like any other suggestion) to be a possibility.” However, with current proposals to turn various core Maker units into MetaDAOs attracting community support, it seems likely that much of Christensen’s vision for the project’s restructuring could shape MakerDAO in the future.
