Weekly Relay: March 22nd - 28th, 2022

--- tags: Weekly Relay --- # Weekly Relay: March 22nd - 28th, 2022 ![](https://i.imgur.com/YMWv0P3.png) _Hi everyone, thanks for checking out the Weekly Relay! Whether you hold MKR or DAI, own a vault, or want to get more involved in governance, this is your one-stop-shop for MakerDAO updates._ > The public PDF version is available [here.](https://pdfhost.io/v/ug82SkJYu_Weekly_Relay__March_22_28_2022) > Show some love to our [Medium account](https://medium.com/@MkrGovComms/makerdao-current-events-governance-signals-and-calendar-28a3b7030575) :heart_decoration: 🍵 Current Events 🗳️ This Week in Governance 🤿 Community Deep Dai-ve 📆 Mark your Calendar ⚓ Useful Links 🎙️ Have Feedback? ## 🍵 Current Events ### [Tokenomics Debate Rages On](https://forum.makerdao.com/t/a16z-makerdao-tokenomics-proposal-overview/14134) Improving MKR tokenomics to provide the best value for MKR holders and achieve other goals for stakeholders in the Maker ecosystem has been a hot topic in the community since its inception. In [last week's Relay](https://forum.makerdao.com/t/weekly-relay-march-15-21-2022/14119), we covered stkMKR, a [proposal](https://forum.makerdao.com/t/stkmkr-maker-staking-and-tokenomics-revision/13890) to bring staking functionality to MKR through a new stkMKR token, aiming to increase governance participation, improve the value accrual narrative for MKR token, increase governance security, and increase resilience to credit losses. In that same issue, we also covered @cryptenthusiastic's [proposal](https://forum.makerdao.com/t/anti-inflationary-proposal/13928) for a tokenomics model that decouples the value of Dai from the inflation factor of fiat currency, helping make Dai the stablecoin of choice for investors taking profits during bull markets and making it attractive to institutions and businesses. Last week, members of the A16z team, including Luca Pro, co-authored a four-part proposal titled "Suggestions for Community Discussion: Innovating MakerDAO’s Token Model." Let us dive in and see how this latest proposal compares and contrasts with the discussion we have seen so far. **[A16z MakerDAO Tokenomics Proposal Overview](https://forum.makerdao.com/t/a16z-makerdao-tokenomics-proposal-overview/14134)** In the initial overview post, the team explored the existing MKR tokenomics model and introduced its three-pronged approach to innovating it. Under the existing model, Maker's profits are directed to filling a System Surplus Buffer. When the Buffer has a surplus, MKR tokens are permissionlessly bought back and burned to boost the price of the MKR token. As has been [pointed out](https://forum.makerdao.com/t/against-the-burn/13412) by several Maker contributors, the buy-and-burn model may not be optimal for achieving the community's broader long-term goals. With the aims of "maximizing value creation, creating new utility for the MKR token, adding yield-bearing layer of financial resiliency, and increasing the durability and efficiency of governance processes," the team has put forward three proposals for discussion, each with its separate post. ### The following posts were submitted as a three-part thread, which has a separate [overview](https://forum.makerdao.com/t/a16z-makerdao-tokenomics-proposal-overview/14134) available summarizing all three proposals: **[A16z MakerDAO Tokenomics Proposal One: Adding Utility Functionality to the MKR Token](https://forum.makerdao.com/t/a16z-makerdao-tokenomics-proposal-one-adding-utility-functionality-to-the-mkr-token/14135)** This proposal, split into three sub-proposals, focuses on increasing the utility of the MKR token. **Sub-proposal 1**: Require MKR as additional on-chain collateral for RWA-based or structured vaults involving less transparent off-chain liquidation mechanisms, ideally as a first-loss capital. This MKR can also be combined with other external assets like ETH as an on-chain collateral package. This requirement would be *in addition* to the normal RWA collateral structure. This change could help improve the alignment of the borrower and serve as an additional margin of safety. **Sub-proposal 2**: Create a Secondary Surplus Buffer to serve as an additional layer of consumer protection (in line with the [Self Insurance Fund proposal](https://forum.makerdao.com/t/self-insurance-fund/10563)) that offers a yield distribution to those who voluntarily stake their MKR. Much like other major DeFi insurance pools, these tokens would be used to help backstop a potential shortfall event, in this case, one beyond that of the System Surplus Buffer. **Sub-proposal 3**: Incentivize auction participants to stake MKR in collateral auctions, better aligning the interests of auction participants with the overall interests of the system. The main idea is to offer a discount, applied as a rebate, to the collateral auctioned for participants who stake their MKR in the auction. **[A16z MakerDAO Tokenomics Proposal Two: Aligning Governance Incentives](https://forum.makerdao.com/t/a16z-makerdao-tokenomics-proposal-two-aligning-governance-incentives/14137)** This post, focused on aligning governance incentives across the Maker ecosystem, is also broken down into three sub-proposals. **Sub-proposal 1**: Incentive Alignment: One idea to address incentive alignment among the MakerDAO workforce, MKR delegates, and MKR holders is to **reward both regular voters and official delegates with a vesting bonus denominated in MKR tokens** based on MakerDAO’s long-term performance and each contributor's cumulative activity. **Sub-proposal 2**: Participation: There are various pros and cons to weigh regarding a possible Curve-inspired “veToken” model application to MakerDAO. There could be some benefits to **rewarding long-term participants with more voting power**; however, @NikKunkel and @monet-supply raised [excellent counterpoints](https://forum.makerdao.com/t/signal-request-gbmkr-a-proposal-to-benefit-long-term-mkr-holders/12756/16) against the implementation of the proposal as written. **Sub-proposal 3**: Information and Expertise: One item that could be especially helpful to the community is a **new governance dashboard** that clearly shows the linear flow for proposals, provides links with details to discussions (the forum is like a maze even for experienced users, let alone new ones), and organizes topics in a way that any newcomer can easily understand. **[A16z MakerDAO Tokenomics Proposal Three: Increasing Financial Resiliency and Fostering Growth](https://forum.makerdao.com/t/a16z-makerdao-tokenomics-proposal-three-increasing-financial-resiliency-and-fostering-growth/14138)** The series concludes with the third and final proposal: Increasing the System Surplus Buffer to begin aligning it with calculated, vault-specific expected losses related to credit and liquidation risk as to the primary insurance pool for MakerDAO. To summarize the reasoning, "@krzkaczor elegantly [outlined](https://forum.makerdao.com/t/against-the-burn/13412) why MakerDAO should focus on aggressive growth with retained earnings: capital is hard to come by and should be used most efficiently to achieve more long-term earnings. Given the start-up nature of MakerDAO and its incredible potential, capital could be reinvested in ways to improve Maker's profitability and sustainability as it grows." For now, the team suggests that MakerDAO could keep the Surplus Buffer at \$250M while the community decides on capital allocation routes and finalizes the metrics that determine its size. ## 🗳️ This Week in Governance ### Maker Improvement Proposals (MIPs) [Weekly MIPs Update #80](https://forum.makerdao.com/t/weekly-mips-update-80/14274) ![](https://i.imgur.com/SMnIsFY.png) March Ratification Polls Just Closed. - RFC and FS Dates for reference and existing proposals can be seen [on this proposal tracker (WIP)](https://docs.google.com/spreadsheets/d/1OHZa-f4C2Z8PteZBb1Mfiz-MJn5Ky_PM15mM1QLgIRY/).\ - If you have any questions about the voting process at MakerDAO, the [Practical Guide to Voting](https://manual.makerdao.com/governance/voting-in-makerdao/practical-guide-voting) will be useful. --- Nine March Ratification Polls that entered the Monthly Cycle closed today at 16:00 UTC and have all passed. We have two ongoing weekly-cycle Ratification Polls that will run for three days. There are two ongoing weekly-cycle Ratification Polls that will run for three days: - MIP55c3-SP3: SPF ETHAmsterdam Event - MIP4c3-SP2: MIP62 Amendment There are 20 recent/active proposals with RFC status, most eligible to enter the [April Governance Cycle](https://forum.makerdao.com/t/weekly-mips-update-79-pinata/14106#things-to-come-crystal_ball-4). --- Pre-MIP Discussions - [Anti-inflationary Proposal](https://forum.makerdao.com/t/anti-inflationary-proposal/13928) - [Auction-backed DAI](https://forum.makerdao.com/t/auction-backed-dai/13011/11) - [IAM for Surplus Buffer](https://forum.makerdao.com/t/premip-iam-for-surplus-buffer/11584) - [Proposal Ideas on the Forum](https://forum.makerdao.com/c/mips/proposal-ideas/21?order=activity) - [[Pre-MIP] Using Gyroscope to cut through Dai's Gordian knot: its USDC dependency](https://forum.makerdao.com/t/pre-mip-using-gyroscope-to-cut-through-dai-s-gordian-knot-its-usdc-dependency/8865) - [An RWA style solution to replace the PSM](https://forum.makerdao.com/t/an-rwa-style-solution-to-replace-the-psm/8705) ### Executive Vote [Authorizing the ESM on DssFlash and Adding Support for TUSD Implementation](https://vote.makerdao.com/executive/template-executive-vote-authorizing-the-esm-on-dssflash-and-adding-support-for-tusd-implementation-march-25-2022#proposal-detail) This executive proposal passed on March 26, and the following changes occurred within the Maker Protocol: #### Authorizing ESM on DssFlash to Remove Governance Permissions Based on [this post](https://forum.makerdao.com/t/proposed-security-fix-to-be-added-in-the-march-25th-2022-executive-spell/14197) from the [Protocol Engineering Core Unit](https://mips.makerdao.com/mips/details/MIP38#protocol-engineering-pe-001-), the [Emergency Shutdown Module](https://makerdao.world/en/learn/governance/emergency-shutdown) was authorized on the [Flash Mint Module](https://manual.makerdao.com/module-index/module-flash-mint-module). This change is intended to patch a vulnerability discovered in the interaction [between the Emergency Shutdown Module and the Flash Mint Module](https://forum.makerdao.com/t/flash-loan-debt-manipulation-during-emergency-shutdown-vulnerability-postmortem/14036). Specifically, this change prevents a malicious governance action from re-activating the DssFlash module after the [FlashKiller contract](https://github.com/makerdao/flash-killer) disables it. #### Adding Support for New TUSD Implementation Based on [this post](https://forum.makerdao.com/t/2022-03-25-adding-support-for-the-new-tusd-implementation-address/14189) from the [Protocol Engineering Core Unit](https://mips.makerdao.com/mips/details/MIP38#protocol-engineering-pe-001-), support for the new TUSD implementation address was added. This addition is intended to resume the collateral operations for TUSD-A, which automatically halted after the [February 24th change](https://etherscan.io/tx/0x125823f2914e4f14e06b9b1b30fe9dd9512b36354cc1f6c063118c4fe03d8287) from the TUSD team pointed to a new implementation address. For more information, please consider reading [this thread](https://forum.makerdao.com/t/tusd-disabled-due-to-unannounced-token-upgrade/2747) on the last time the TUSD contracts were changed. ### Active Governance Polls | Poll Name | Discussion | | :-------: | :--------: | | [Investigate Implementation of a Notional Finance D3M](https://vote.makerdao.com/polling/QmcBwWAx#poll-detail) | [Discussion](https://forum.makerdao.com/t/signal-request-onboard-d3m-for-notional-finance/13782) | | [Short Ratification Poll for MIP62 Amendments (MIP4c3-SP2)](https://vote.makerdao.com/polling/QmXZPYAu#poll-detail) | [Discussion](https://forum.makerdao.com/t/mip4c3-sp2-mip62-amendments/13779) | | [Initial Parameters for StarkNet Simple DAI Bridge](https://vote.makerdao.com/polling/QmUnhQZy) | [Discussion](https://forum.makerdao.com/t/mip4c3-sp2-mip62-amendments/13779) | | [Short Ratification Poll for SPF ETHAmsterdam Event (MIP55c3-SP3)](https://vote.makerdao.com/polling/Qmb9brx3) | [Discussion](https://forum.makerdao.com/t/starknet-simple-bridge-limit-poll-risk-assessment-mitigation/14158) | *Check out [March 21st's](https://forum.makerdao.com/t/weekly-relay-march-15-21-2022/14119) issue of Weekly Relay for more information on the most recently concluded polls.* ### Community Greenlight Polls There were no active community greenlight polls for the week of March 15 - 21, 2022. _Check out an "at-a-glance" view of the current Vault types and their parameters on [MakerBurn.](https://makerburn.com/#/rundown)_ ### Active Signal Requests **[[Signal Request] Onboard PAXG](https://forum.makerdao.com/t/signal-request-onboard-paxg/13768)** Sebastien from the Strategic Finance Core Unit revisits the topic and attempts to push PAXG to be onboarded. All risk assesments have been submitted during 2020: - [[PAXG] ERC20 Token Smart Contract Domain Community Assessment](https://forum.makerdao.com/t/paxg-erc20-token-smart-contract-domain-community-assessment/3443) - [[PAXG] Collateral Onboarding Oracle Assessment (MIP10c3-SP16)](https://forum.makerdao.com/t/paxg-collateral-onboarding-oracle-assessment-mip10c3-sp16/5376) - [[PAXG] Collateral Onboarding Risk Evaluation](https://forum.makerdao.com/t/paxg-collateral-onboarding-risk-evaluation/4833) Additionally, PAXG was [previously approved](https://vote.makerdao.com/polling/QmYwY5gP) for onboarding through a governance poll. Today, both market cap and liquidity for PAXG have significantly increased, and the Uni V2 poll, although small, is handling 2M of hourly volume and 50M daily. Parameters proposed for PAXG are a Debt Ceiling of 5M, a Liquidation Ratio of 125% (which may be instead set to 130%), and a Stability Fee of 4% that may also be altered based on current situations. Sebastien provides the pros and cons of onboarding PAXG and concludes the signal request by asking the community whether they want to onboard PAXG as a collateral type in Maker's MCD? **Vote will run until April 5, 2022.** Here are the current voting results: ![](https://i.imgur.com/xa0sqpN.png) ## 🤿 Community Deep Dai-ve ### Tweet of the Week https://twitter.com/itsdanwu/status/1508433956177330179 ### Forum Insight [Towards taking asset risks - A primer](https://forum.makerdao.com/t/towards-taking-asset-risks-a-primer/14265) ![](https://i.imgur.com/T2AnXRr.gif) This week, we are highlighting @SebVentures' post exploring ways to invest the MakerDAO balance sheet into productive assets. In the [Asset-Liability Management (ALM) Framework](https://forum.makerdao.com/t/alm-framework-for-makerdao/12994) for MakerDAO, asset risk is defined as "asset fluctuation risk over the long-term," plus an additional value at risk (VaR), thought of as "the minimum amount of equity required to safely hold such an asset and be in line with MakerDAO risk appetite." If you want to learn more about VaR, check out [Measuring Market Risk by Kevin Dowd](https://www.wiley.com/en-dk/Measuring+Market+Risk,+2nd+Edition-p-9780470013038) and [Risk Management in Banking by Joël Bessis](https://www.wiley.com/en-us/Risk+Management+in+Banking%2C+4th+Edition-p-9781118660218). (Note: It is important to be aware, as the author points out, that the VaR paradigm remains fiercely debated in the finance world.) After providing a formal definition of VaR, we encounter our first case study: ETH. The Internal Rate of Return (IRR) of ETH, while volatile, is impressive overall. ![](https://i.imgur.com/JlRLtWj.png) As @SebVentures points out, we know that much of the price action going forward will be linked to the burning mechanism and the inflation rate. While these are expected to eventually settle into low single-digit numbers, a 50% or 100% metric for return on assets (RoA) is prudent for the coming years. The VaR/RoE model is given below for 50%, 100%, and 200% RoA. ![](https://i.imgur.com/ZZJoiXj.png) Judging by our model, @SebVentures concludes that ETH seems to be an investment option worth exploring despite its high volatility. However, this strategy will require a bigger Surplus Buffer and will not help make Maker's idle assets more productive. Check out the full post for further case studies and conclusions on gold, short-term corporate bonds, short-term treasury bonds, and short-term blended bonds. ![](https://i.imgur.com/lkPJdpF.png) ### Articles - [Making MakerDAO Matter Again](https://www.nasdaq.com/articles/making-makerdao-matter-again) - *"Today, Andreessen Horowitz, the venture capitalist firm with massive stakes across crypto, including in Maker, proposed adding “functionality to the MKR token” to make it a more attractive investment and protocol. The details of each are worth looking into if you’re interested (it’s above my head, to be honest), but in short, both are proposals to expand the range of assets Maker interacts with and the way it manages collateral and fees. Maker has reinvented itself in the past. In November 2019, the protocol launched “multi-collateral” dai, allowing users to collateralize additional assets, including Basic Attention Token (BAT). Similar functionality for wrapped bitcoin (wBTC) came a few months later. More recently, the project has been expanding further into the world of traditional finance, allowing users to use real estate to finance loans. In September, French banking giant Société Générale (SG) applied for a $20 million loan in DAI."* ## 📆 Meetings and Events ### Last Week's Call Recordings - Governance and Risk | Ep. 183 - [Video](https://youtu.be/7rxxNBmcIFk) | [Forum](https://forum.makerdao.com/t/governance-and-risk-183-thursday-march-24-17-00-utc/14150) - Focus On #08 | stkMKR: Staking & Tokenomics Revision - [Video](https://youtu.be/uGvBI_L9jaI) | [Forum](https://forum.makerdao.com/t/focus-on-8-stkmkr-staking-tokenomics-revision/14001) - Focus On #07 | RWF Lending Principles - [Video](https://youtu.be/0PHMxH9zsR4) | [Forum](https://forum.makerdao.com/t/focus-on-7-rwa-lending-principles/14000) ### Upcoming Calls - Issue Discussion Call #5 | Budget Modification Process - March 30th at 5 PM UTC - [Join Link](https://us02web.zoom.us/j/83222037524) | [Forum](https://forum.makerdao.com/t/issue-discussion-call-5-budget-modification-process/14226) #### Governance & Risk - [Join Link](https://zoom.us/j/697074715) | [Agenda](https://forum.makerdao.com/c/governance/gnr/8) - Thursdays at 17:00 UTC #### Core Unit Office Hours - [Join Link](https://us02web.zoom.us/j/82603350722?pwd=RThleVo5QlBRT1FuOWxiRCs3K0k2Zz09) | GovAlpha Governance Q&As - Mondays 17:00 UTC - [Join Link](meet.google.com/frj-vpji-huc) | Immunefi Security - Tuesdays 00:00 UTC - [Join Link](https://www.google.com/url?q=https://meet.google.com/bjm-qiup-hif&sa=D&source=calendar&ust=1620493080631000&usg=AOvVaw056SKuyQn3F67FAtJTPIbl) | Protocol Engineering - Tuesdays 15:00 UTC - [Join Link](https://us02web.zoom.us/j/85252786103?pwd=bEZaZXdEcGlSWWd5bmpxMDBvVjdEUT09) | Sustainable Ecosystem Scaling - Tuesdays 15:30 UTC - [Join Link](https://meet.google.com/sap-nttu-xga) | Growth - Wednesdays 17:00 UTC - [Join Link](https://meet.google.com/kwf-qayf-xdq) | Real World Finance - Wednesdays 17:00 UTC - [Join Link](https://meet.google.com/nio-jrqq-guu) | Governance Communications - Fridays 18:00 UTC ## ⚓ Useful Links [Forum](https://forum.makerdao.com) and [Maker Chat](https://chat.makerdao.com) Discuss and debate MakerDAO. [Call Calender](https://calendar.google.com/calendar/u/0?cid=bWFrZXJkYW8uY29tXzNlZmhtMmdoaXBrc2VnbDAwOWt0bmlvbWRrQGdyb3VwLmNhbGVuZGFyLmdvb2dsZS5jb20) | [Votes & Event Calendar](https://calendar.google.com/calendar/embed?src=bdf4un05hpg0611lg3ieue4t3c%40group.calendar.google.com&ctz=America%2FNew_York) Subscribe to both for all public calls, votes, and other reminders. [Participation Tools](https://community-development.makerdao.com/en/learn/governance/participate) Library of useful links for stakeholders: protocol analytics, DAI analytics, collateral & liquidation metrics, governance history, and auctions data. [Governance Portal](https://makerdao.com/en/governance) Voting dashboard for MKR voters. [MIPs Portal](https://mips.makerdao.com/mips/list) MIPs dashboard for everyone. [Learning Portal](https://community-development.makerdao.com/en/learn/) and [Technical Documentation](https://docs.makerdao.com/) Learn more about the Maker protocol. ### 🎙️ Have Feedback? We value your input! Take our [survey](https://survey.sogosurvey.com/r/OBV0Y7) to let us know what we might be missing or how to do better. *Disclaimer: This update is assembled by a group of contributing members in the MakerDAO community. This does not serve as financial advice or an inducement to vote in any specific way. This update is for information and communication purposes only.* ##### Credit @Artem_Gordon @nothsa