# SubDAOs

## What are SubDAOs?

SubDAOs are semi-independent DAOs that are formed by MakerDAO and designed for protocol alignment. SubDAOs arise from the need to keep MakerDAO flexible while keeping a near-immutable Maker Constitution and a minimal Maker Core. Simultaneously, they address long-standing issues and concerns in MakerDAO such as ever-growing, unwieldy complexity that results in haphazard prioritization and resource allocation, governance confusion, and clumps of centralization within that can result in, at best, less-than-optimal performance and, at worst, single points of failure with system-wide repercusions.

SubDAOs have each their own unique governance token, governance processes and workforce. They are driven by a self-determined, self-aware *meta* (understood as the non-quantifiable values, aspirations, and sensibilities within a human-operated organization -- its *ethos*). They are, in most respects, self-standing DAOs. However, subDAOs governance processes run on top of MakerCore governance infrastructure and MKR holders hold control of their treasury.

By fragmenting MakerDAO's workforce into largely free-ranging, self-interested yet subsidiary/tributary entities, SubDAOs segregate complexity from MakerCore, alleviate the cognitive load of governance, and derisk MakerDAO by sandboxing the effects of their operations.

~~## Clusters~~

~~SubDAOs are built from their own grassroot community up as opposed to being built by their core working teams --- they are lifted into existence by cranes, not by skyhooks. This bottom-up genesis is initially achieved through clusters. Clusters are self-selecting groups of people (in practice, mostly Core Unit members) who put themselves forth as prospective working teams to be voted into an eventual SubDAO by that SubDAO's token holders.~~

~~At a later stage, subDAOs will be incubated automatically, with no human involvement, via a smart contract~~

## WHY

## HOW

## SubDAO Classes

SubDAOs are classified into three classes:

- **Facilitator subDAOs**: Facilitate governance for other subDAOs, for scope frameworks, and for arbitration.
- **Protector subDAOs**: Protect real-world collateral loans. They house RWA products and take on a first-loss position on all non-decentralized lending.
- **Creator subDAOs**: Further decentralized collateral revenue streams. They focus on revenue and product generation.

The class determines how a given subDAO interacts with Maker Core.

### Facilitator SubDAOs

TBD

### Protector SubDAOs

Protector subDAOs focus on intermediating Maker Core's interaction with the physical, regulated, law-bound real world. Concretely, their primary focus is to facilitate and implement real-world asset collateralization. They are also tasked with protecting its RWA collateral against legal and physical threats.

#### RWA Vault Adoption

Protector subDAOs can only adopt vaults that conform either to the cashlike RWA collateral standard or to the Clean Money RWA collateral standard.

RWA vault adoption must be ratified by Maker Governance through a vault adoption MIP, which sets the vault's debt ceiling and its capital cost ---i.e., the minimum expected return---, which in turn defines how much of the Stability Fee for the adopted vault must go to Maker Core.

Protector subDAOs can use its internal governance processes to allocate up to its vault adoption Debt Ceiling to its arrangers.

Adopted vaults impose a first-loss position for the adopting protector subDAO on all downsides.

### Creator SubDAOs

Creator subDAOs focus on innovation, experimentation, and growth --- both with regards to technology and also branding and meta development. They are the most open-ended of subDAO classes.

#### Home Base

TBD

#### Decentralized Vault Adoption

Creator subDAOs can adopt existing or new vault types on the Maker Protocol Vault Engine. The choice of vault to adopt is made by the subDAO itself via its internal governance processes. However, the adoption must be ratified by Maker Governance through a MIP that sets a Debt Ceiling for the adopted vault and its capital cost ---i.e., the minimum expected return---, which in turn defines how much of the Stability Fee for the adopted vault must go to Maker Core.

Adopted vaults impose a first-loss position for the adopting creator subDAO on all downsides.

## Easy Governance Frontends

Easy Governance Frontends (EGF) are the outward-facing presentation of subDAOs. They serve three functions:

1. Provide a place where subDAOs can express their brand and unique meta in order to connect with their community and funnel new users into using the protocol.
2. Provide access to the services provided by the subDAO (vanilla Maker Vaults plus any additional services the subDAO offers---e.g., RWA vaults).
3. Provide governance tools for the subDAO and the broader MakerDAO.
- These include Dai generation via MKR delegation (effectively MKR Vaults), and Dai staking for subDAO token rewards.

So EGFs have all a common set of base features: access to Maker Vaults, yield farming tools, governance interfaces. Initially, EGFs are expected to amount to little more than a basic template with limited customizability; eventually, though, they are to go fully decentralized and provide multiple redundant options for state-of-the-art financial security, resilience, and privacy.