Episode #189: May 5th, 2022 | Semi-transcription

# Episode #189: May 5th, 2022 | Semi-transcription ## Agenda - [00:00](https://youtu.be/ZJSmzCTSbsA?t=1): Introduction - [02:03](https://youtu.be/ZJSmzCTSbsA?t=123): Votes and Polls - [05:06](https://youtu.be/ZJSmzCTSbsA?t=306): MIPs Update - [08:00](https://youtu.be/ZJSmzCTSbsA?t=480): Forum at a Glance - [15:46](https://youtu.be/ZJSmzCTSbsA?t=946): Initiatives Update: April Financials - [36:06](https://youtu.be/ZJSmzCTSbsA?t=2166): Discussion: Governance Cadence Change - [44:30](https://youtu.be/ZJSmzCTSbsA?t=2670): Discussion: Request for Proposals - [55:04](https://youtu.be/ZJSmzCTSbsA?t=3304): Discussion: Prioritization Voting Framework - [1:13:55](https://youtu.be/ZJSmzCTSbsA?t=4435): Discussion: How to Improve on Follow-Through? - [1:24:06](https://youtu.be/ZJSmzCTSbsA?t=5046): Conclusion ## [Video](https://youtu.be/ZJSmzCTSbsA) ## Introduction ### Agenda and Preamble #### Payton Rose [00:00](https://youtu.be/ZJSmzCTSbsA?t=1) - Hello, everyone, and welcome. This is the 189th Governance & Risk Call. My name is Payton; I go by Prose11 online. I am one of the Governance Facilitators here at MakerDAO. This is our weekly governance call, where we talk about what is happening _in_ and _around_ Maker and potential risk factors to the protocol. - For those of you joining us live, I remind you that we are recording this meeting. Try not to speak over one another. If you want to enter the conversation, Zoom provides helpful tools such as the _raise hand_ feature, which allows me to create a speaking queue and decide whom to call next. If you cannot use your microphone, you can always leave a comment in our chat, and I will be happy to read it when we get over to it. - We have an agenda to build off of today: we will start with our Governance Roundup--containing the _Votes, MIPs Update, and Forum at a Glance_--; next, Initiative Updates--this will be _April Financials and Governance Cadence Change_--; and finally, the main discussion of the day: _Governance Improvements._ After all that, if there is still time, we will get to the Open Discussion. ## General Updates ### Votes #### Payton Rose *Polls:* - 2 Weekly Polls - **PASSED** - Investigate Implementation of a TrueFiD3M - PPG - Open Market Committee Proposal - 2 Concluded Greenlight Polls - sETH2 - **100% Approval** Stakewise Staked ETH - HVBANK - **0% Opposition** - Huntingdon Valley Bank Loan Syndication Collateral - 2 Ongoing Greenlight Polls (Voting Ends May 16th) - ATDC (ATD Combustors) - IPCI (India Power Green Bonds) *Executive:* - Last Week - Core Unit Budget - Distributions - **Passed and Executed** - PE-001, COM-001, EVENTS-001, SH-001, DIN-001 - Tomorrow - Recgonized Delegate Payments - MOMC Proposal, wstETH-B Onboarding ### MIPs #### Pablo [05:06](https://youtu.be/ZJSmzCTSbsA?t=306) [Weekly MIPs Update #86](https://forum.makerdao.com/t/weekly-mips-update-86-may-9-2022/15058) ![Calendar](https://i.imgur.com/orw6toe.png) ![MIPs](https://i.imgur.com/OevqKGn.png) #### [_**May's Formal Submissions**_:](https://youtu.be/ZJSmzCTSbsA?t=320) - [MIP65: Project Clydesdale: Monetalis Arrangement I: Liquid Bond Strategy & Execution](https://forum.makerdao.com/t/mip65-clydesdale-monetalis-liquid-bond-strategy-execution/13148) - MIP65 will onboard and activate an RWA vault to acquire USDC via PSM and invest them in high-quality liquid bond strategies held by a trust arranged and maintained by Monetalis. - [_Vote Breakdown_ - MIP65](https://vote.makerdao.com/polling/QmXHM6us#vote-breakdown) - [MIP68: Monetalis Lusitano: UK Green Economy SME Wholesale Lending](https://forum.makerdao.com/t/mip68-monetalis-lusitano-uk-green-economy-sme-wholesale-lending/13789) - MIP68 is a self-contained collateral onboarding MIP that will onboard and activate an RWA vault backed by the assets of a trust arranged by Monetalis. - [_Vote Breakdown_ - MIP68](https://vote.makerdao.com/polling/QmS7UyQT#vote-breakdown) - [MIP69: L2 to L1 Fast Withdrawals](https://forum.makerdao.com/t/mip69-l2-to-l1-fast-withdrawals/14041) - MIP69 formalizes technical work completed to deliver Fast Withdrawals on Layer2. - [_Vote Breakdown_ - MIP69](https://vote.makerdao.com/polling/QmWZvSpa#vote-breakdown) - [MIP4c2-SP19: MIP40 Budget Process Amendment](https://forum.makerdao.com/t/mip4c2-sp19-mip40-budget-process-amendment/14250) - MIP4c2-SP19 revises MIP40 as well as related subcomponents MIP40c1, MIP40c2, MIP40c3 and MIP40c4. - [_Vote Breakdown_ - MIP4c2-SP19](https://vote.makerdao.com/polling/QmXVjbWG#vote-breakdown) - [MIP40c3-SP67: Modify Core Unit Budget - Strategic Happiness, SH-001](https://forum.makerdao.com/t/mip40c3-sp67-modify-core-unit-budget-strategic-happiness-sh-001/13805) - MIP40c3-SP67 updates the budget for the Strategic Happiness Core Unit, SH-001. - [_Vote Breakdown_ - MIP40c3-SP67](https://vote.makerdao.com/polling/QmQkxx16#vote-breakdown) ###### :round_pushpin:_**The Ratification Polls for these proposals will go up on Monday 9 and run for two weeks until Monday 23.**_ #### [_**Proposals in RFC**_:](https://youtu.be/ZJSmzCTSbsA?t=374) - [MIP72: Delegated Collateral Attachment - RWA Arranger Application - 6s Capital](https://forum.makerdao.com/t/mip72-delegated-collateral-attachment-rwa-arranger-application-6s-capital/14482) - MIP72 authorizes 6s Capital as a Real World Asset Arranger for MakerDAO to cause commerce by assembling commercial senior-secured transactions based on the authorization #001 outlined herein. - [MIP4c2-SP15: Core Unit Offboarding Process Amendments](https://forum.makerdao.com/t/mip4c2-sp15-core-unit-offboarding-process-amendments/12920) - Recent events have shown the process for involuntarily offboarding facilitators and core units could be improved. These changes attempt to make the process more transparent, orderly, and conducive to an offboarding proposal's substantive discussion prior to a vote. - [MIP4c2-SP20: MIP16 Amendments](https://forum.makerdao.com/t/mip4c2-sp20-mip16-amendments/14980) - MIP4c2-SP20 amends [MIP16](https://mips.makerdao.com/mips/details/MIP16) to reflect the changes to the weekly Executive Vote cadence proposed by the Protocol Engineering Core Unit [here](https://forum.makerdao.com/t/governance-cadence-improvement/14972). - [MIP41c4-SP34: Immunefi Security Core Unit Facilitator Onboarding, IS-001](https://forum.makerdao.com/t/mip41c4-sp34-immunefi-security-core-unit-facilitator-onboarding-is-001/14610) - MIP41c4-SP34 onboards @psychonaut (Jpritikin Industries, Inc) as a co-Facilitator for Core Unit IS-001: Immunefi Security. - [MIP41c4-SP35: Facilitator Onboarding, DIN-001](https://forum.makerdao.com/t/mip41c4-sp35-facilitator-onboarding-din-001/14948) - MIP41c4-SP35 onboards @tadeo as the Facilitator for the Data Insights Core Unit. - [MIP41c5-SP6: Facilitator Offboarding, DIN-001](https://forum.makerdao.com/t/mip41c5-sp6-facilitator-offboarding-din-001/14946) - MIP41c5-SP6 offboards @tmierzwa as the Facilitator of the Data Insights Core Unit. MIP41c4-SP35 accompanies it to onboard @tadeo as the new Facilitator. Together, these two MIPs complete the voluntary transfer of the responsibilities of the Data Insights Core Unit Facilitator from @tmierzwa to @tadeo. - _Note that this is a voluntary offboarding and will not be voted on._ - [MIP55c3-SP4: Adding a Special Purpose Fund - Makershire Hathaway](https://forum.makerdao.com/t/mip55c3-sp4-adding-a-special-purpose-fund-makershire-hathaway/14643) - The Makershire Hathaway Special Purpose Fund will be a 10M pool managed by Strategic Finance CU under the supervision of Risk CU and prospective Lending Oversight CU to experiment with various yield generation strategies and support DAI liquidity/utility. ###### :warning:_**If you plan to have your proposal enter the upcoming June's Governance Cycle, please have it posted in the Forum no later than Wednesday 11!**_ ### Forum at a Glance #### Artem Gordon [8:00](https://youtu.be/ZJSmzCTSbsA?t=480) Post: [Forum at a Glance: April 28th - May 2nd](https://forum.makerdao.com/t/forum-at-a-glance-april-28-may-4-2022/14981) Video: [Forum at a Glance](https://youtu.be/ZJSmzCTSbsA?t=481) - [_**News & Announcements:**_](https://youtu.be/ZJSmzCTSbsA?t=500) - [First Annual Gala Charity Dinner](https://forum.makerdao.com/t/first-annual-gala-charity-dinner/14848) - [Fund retrieval exclusion from executive](https://forum.makerdao.com/t/fund-retrieval-exclusion-from-executive/14959) - [Asset Change Request Process](https://forum.makerdao.com/t/asset-change-request-process/14956) - [Governance Cadence Improvement](https://forum.makerdao.com/t/governance-cadence-improvement/14972) - [_**Discussions:**_](https://youtu.be/ZJSmzCTSbsA?t=619) - [Governance Reflections: Optimism and Maker](https://forum.makerdao.com/t/governance-reflections-optimism-and-maker/14957) - [MakerDAO - intangibles for a better DAO](https://forum.makerdao.com/t/makerdao-intangibles-for-a-better-dao/14860) - [Macro - Rising bond yields and DAI](https://forum.makerdao.com/t/macro-rising-bond-yields-and-dai/14944) - [_**Signal Requests:**_](https://youtu.be/ZJSmzCTSbsA?t=703) - [Change `lid` Parameter on the Rate Limiter](https://forum.makerdao.com/t/signal-request-change-lid-parameter-on-the-rate-limiter/14688) - [Deploy the balance sheet in ETH](https://forum.makerdao.com/t/signal-request-deploy-the-balance-sheet-in-eth/14834) - [Restart The Burn :fire: [V2]](https://forum.makerdao.com/t/signal-request-restart-the-burn-v2/14918) ## Initiatives Update ### April Financials #### Aes [15:46](https://youtu.be/ZJSmzCTSbsA?t=946) ![Monthly Reporting - April Financials](https://i.imgur.com/56Fovu1.png) - Hello, everyone. This is Aes from the forums, the Strategic Finance Core Unit facilitator. ![April Financials - Legal Disclaimer](https://i.imgur.com/EBtscEg.png) - A brief Legal Disclaimer before we begin: - This report is for informational purposes only. - It does not constitute financial investment, legal, regulatory, or tax advice. ![April Financials - Overview](https://i.imgur.com/mtFd5pw.png) - The protocol earned 7.7 million in revenue last month, a 29% increase from the prior month and a 39% decrease from the prior year. As you might remember, last April was an extremely bullish period, with ETH-A rates at 5.5% for the entire month. - As you might remember, last April was an extremely bullish period, with ETH-A rates at 5.5% for the entire month. - DAI supply from risk-weighted assets ended the month about 500 million lower than last year. We ended the month at 3.3 million in risk-weighted assets versus 3.8 million last year. - On-chain workforce expenses decreased 28% from last month, and Oracle gas expenses increased by 26%. ![April Financials - MoM & QoQ](https://i.imgur.com/lFegt1x.png) - As you can see in the waterfall chart for the MoM walk, we had a recurring net protocol income increase by 0.7 million from March, driven entirely by 0.9 million and fewer workforce expenses. - We had lower lending yields, offset mainly by an increase in assets. - On a _QoQ_ basis, we saw a significant lending yield and asset compression. - Average risk-weighted assets used in the diet decreased from 5.4 billion down to 3.6 billion, and the average loan yield decreased 78 basis points from 2.69% to 1.91%. ![April Financials - Lending Business](https://i.imgur.com/e7jqpgW.png) - For lending income, we had 5.8 million in revenue. A 100K decrease from the prior month; that is about 2%. ETH dependency increased, driven by WBTC loan reductions. The MLMC recommended cutting WBTC-A rates from 3.25% to 2.25% and WBTC-B rates from 4.5% to 4.4%, which would, hopefully reverse these trends and start to diversify our portfolio further. [18:39](https://youtu.be/ZJSmzCTSbsA?t=1119) ![April Financials - Balance Sheet Assets](https://i.imgur.com/gKVsFGx.png) - **SebVentures:** As you can see, our assets are decreasing mainly due to the PSM unwinding, which, at the same time, is due to lower demand for DAI in the market. Two main factors drive this: - Firstly, the diamond curve decreased, with an outflow that is not as steep as we might see with the 4pool. Still, we will be attentive to its evolution. - Secondly, plenty of DAI went to Avalanche and is returning to mainnet to be swapped to something else. - Nevertheless, our crypto loan book is still slightly increasing. That, at least, provides us with relative safety. - Currently, we are at 57% of stablecoin, still safe on the liquid difference. ![April Financials - Key Risk Metrics](https://i.imgur.com/F8XmQ0Z.png) - Risk is improving. There are fewer assets on the balance sheet. - The leverage ratio, equity divided by assets, is meliorating. Although, that is not for a good reason: you want to grow, not shrink. - A similar phenomenon affects the capitalization ratio, which only uses the yield-bearing assets. - We are safe. This is lower than we should expect to be even safer. Nevertheless, the outlook seems stable, and it is still not very different from last year. [20:18](https://youtu.be/ZJSmzCTSbsA?t=1218) ![April Financials - ETH Market Share](https://i.imgur.com/LNgkyIA.png) ###### _Color Reference: Green = MakerDAO / Red = Compound / Purple = AAVE / Lime = Liquity_ - **adcv:** For the ETH Market Share, the _YoY_ trend is one of a slightly contracting ETH lending market. - Still, this narrative is punctuated with a positive _MoM_ development, brought by an unexpected increase in bulk capacities on AAVE and Maker. - For the most part, Maker tracked the market's growth in that regard. - However, the central notion we wanted to call out was the general tendency for ETH to migrate out of the lending market and AAVE aggressively taking share at Maker's Compound expense. - The impact of broader adoption of stETH alternatives with ETH as collateral is yet to be seen. ![April Financials - WVTC Market Share](https://i.imgur.com/jyldkzY.png) ###### _Color Reference: Green = MakerDAO / Red = Compound / Purple = AAVE_ - There was an unfortunate move from Nexo, where Maker went down to #3 from #1. - The overall WBTC market looks positive, with the supply of WBTC increasing steadily on a _YoY_ basis. - AAVE takes the crown for the amount of BTC they have been able to capture and their positive trend on the _MoM_ basis. ![April Financials - Sablecoins on Arbitrum](https://i.imgur.com/oIh0fZ0.png) - We wanted to finish the discussion with two charts on L2's Arbitrum and Optimism. - Last time, we talked about this in the context of the Stargate launch. - Team members of both Protocol Engineering and Growth have engaged with Stargate and might be able to speak about how that process is evolving. - I would point out that from January to April, Frax has emerged as a strong contender for 3rd place. - This is still a market where, unfortunately, USDC and USDT dominate the stablecoin landscape. - Despite this, there is a lot of talk on the forums about the [_North Star_ being organic DAI demand](https://forum.makerdao.com/t/a-north-star-dai-as-the-destination/14838). This chart should serve as an explanation for why organic DAI demand is crucial for growing the business. It would be a shame to see Frax flip us on origin. ![April Financials - Sablecoins on Optimism](https://i.imgur.com/Z4Ls5IL.png) - The narrative started on a positive note for DAI, but it rapidly evolved into USDC acquiring the lion’s share of Optimism volume in a few months. In addition to that, liquidity is now a new contender. Most likely due to its increased adoption of protocols, such as Synthetix. - We want to emphasize the importance of being able to supply new protocols with large amounts of organic DAI demand upfront. Thus, allowing DAI to have a utility beyond being a receipt for a loan. It is vital for collateralized crypto. - L2s are tracking the overall crypto market but are clearly where the retail market will be in the future. It is something on which we need to keep our energy and attention: getting organic DAI demand back up. - This is the last of the slides we selected; _we chose the best bad news for this call._ There is more bad news in other slides, but we can talk about that if people have any specific questions. [24:41](https://youtu.be/ZJSmzCTSbsA?t=1481) - **Nadia:** I do not think this is bad news. We already knew this. Maker is not on L2 or any other chain yet, but mainnet. It is still difficult for anyone to use DAI without having Maker Vaults. - How does USDC manage this stage? Since all markets have USDC, it is simple for projects like Optimism to integrate with them because of their liquidity. These integrations feedback into increasing USDC's liquidity as well. - Rewards and incentives on side-chains and other networks stimulate stablecoins usage, but most of those are for USDC. - Frax is offering a large amount of money and rewards. The same goes for UST. If we do not take action, this outlook will remain the same. - As soon as we start opening Maker Vaults on Optimism, increasing our liquidity will become much simpler. - We could have D3M and Uniswap. This would solve, at least in the beginning, the liquidity issue we are facing. Managing to give loans through Maple and TrueFi would also increase DAI liquidity. - Otherwise, why would anyone choose to use DAI instead of any other stablecoin, accounting for its currently low liquidity and lack of rewards or incentives stimulating its usage? - Yes, DAI is decentralized. That is not a feature yet. It will be in the future, but it is not at the moment. Now, people go after the yield and rewards. - **Payton Rose:** Thank you, Nadia. Is there anything else we wanted to highlight from Strategic Finance? They alluded to some other information, and I am curious, but I will be happy to leave it there if everyone is happy. - **adcv:** No. I was kidding when I mentioned other information. Zoom out for a second and look at the state of the protocol. It is among the few most profitable in the crypto space, among many protocols that offer similar services, or are in adjacent businesses, currently operating at enormous losses and funding their growth through deficit liquidity, mining incentives, and shared illusion. - We are in an acceptable situation, but this should stress the importance of expanding to where the demand is and continuing to build on that momentum. [28:22](https://youtu.be/ZJSmzCTSbsA?t=1702) - **David Utrobin:** Adrian, do you see the incentives from other projects which are loss-leading slowing down? If so, do you see them slowing down over the next year, over the next five years? I am curious to know how long can loss-leading be sustainable by, maybe not our direct competitors, but other protocols. - **adcv:** Great question. We can further look into it in more detail. I do not have any hard data at the moment. - Obviously, AAVE has a program that feeds stkAAVE to holders. We benefit a little from it. - It is hard to tell, apart from saying that it is not sustainable in the short run. The strategy is to buy as cheap demand as possible with the hope it will stick. - Even so, this is a very competitive business, and yields rule the game. I do not know to what extent these protocols will be able to hold on to their customers once this figure turns off. - **David Utrobin:** Thank you for your view, Adrian. It is something I noticed. Demand is not sticky at all in this industry. It is all numbers. - **Nadia:** It is not sustainable, but we can still follow the better example with incentives and understand why they are not sustainable. We know which models are not: Anchor, Terra, UST. - What happens when they run out of money? They raise funds. Various VCs support them by investing millions and millions so that these models can use the money for incentives and rewards. - I do not know precisely when they will stop doing this. It is a bet, an interesting one. They are paying for usage, hoping that, at some point, without those incentives, these protocols will remain functional. Will it occur? We will have to wait and see. For now, I believe these VCs are only making bets to see what happens. - **Aes:** Circling back to David’s question, we researched this topic at the end of last year. At that time, Compound spent almost 400 million in liquidity mining incentives. AAVE spent around 150 million last year. At that scale, neither of those protocols is anywhere close to profitability. - Some protocols like not include dilution as a cost, but that could not be further from the truth. Dilution is a cost. We reflect non-DAI compensation--AKA MKR compensation--as a real expense. - **Payton Rose:** Thank you, Mark. Any other questions about the April Financials before we move on? [31:40](https://youtu.be/ZJSmzCTSbsA?t=1900) - **ElPro:** Yes. I want to go back to Nadia. Getting off the decentralized finance world, what are some of the obstacles you folks face regarding centralized partnerships? Is it the same thing where there is no liquidity, no incentives? What stops DAI from being listed in circles and pushed to create this POS, these machines that accept USDC at the local shop? Can you give us an idea about that, if possible? - **Nadia:** Yes. Mariano and I talked a lot about this. We have to be aware that DAI is wonderful, but it is not the best stablecoin. I live in Argentina. I understand the importance of decentralization. Although, this notion does not flow worldwide. - Liquidity is what matters. People pay attention to that and how easy it is to convert a stablecoin into FIAT. If you think about this, you will think about USDT and USDC. - We are talking with a company that sells cryptocurrency to banks for them to offer stablecoins to their clients. A benefit for them is that, at some point, they can choose to buy stablecoins with a discount. - That does not happen with DAI. On the contrary, because of its liquidity, if they wish to buy a large amount of DAI, they will not be eligible for a discount. It will be more expensive. We have that big issue: liquidity. - In terms of payments, the crypto market is one thing, and the traditional financial system is another. Payments require liquidity. If we want to be included in a POS and for companies to use DAI, we have to increase DAI liquidity. - You also need to pay attention to what users are looking for. - They are turning to USDC because it is easy to use and UST because of the yield. Everybody knows that they can get an 18%, 19%, 20%--I do not know--and then convert that UST to USDC and swap them for Dollars. - That is what people are looking for: liquidity or rewards. - **Payton Rose:** I see PaperImperium asking in the chat if we are partnered with any cards for people to spend like a Visa card? - **Nadia:** Yes, we have integrated with various partners, but it is mostly crypto cards. It would be different to integrate with, say, PayPal. That is another story. ## Discussion ### Governance Cadence Change #### Thomas Flitter [36:31](https://youtu.be/ZJSmzCTSbsA?t=2191) ![Governance Improvements](https://i.imgur.com/sMeV6Zq.png) - Hello, everyone. My name is Thomas Flitter, Engagement Lead for the GovComms Core Unit. Today, I am here to discuss four pertinent topics. We will get started with _Cadence Change._ ![Governance Improvements - Cadence Change](https://i.imgur.com/ziA3ToU.png) - This is an interesting new improvement proposal that we want to examine. We also want to bring Derek from Protocol Engineering in. I believe [he just posted on the forum](https://forum.makerdao.com/t/governance-cadence-improvement/14972) about this, and I wanted him to have the opportunity to explain it further. ![Governance Improvements - Cadence Change I](https://i.imgur.com/naAVG07.png) - **Derek:** Thank you, Thomas. Hello, everyone. I am Derek from PE. You may or may not have seen the forum post that we recently put up. As Artem and Payton mentioned earlier, this changes the cadence of Executives, moving them from Fridays to Wednesdays. - This is a good move for the Engineering team because it gives us a little more time between when polling starts, ends, and the Executive post. Now not on a Friday, but a Wednesday. - As part of this change, we will continue having the spell cadence weekly and assess that as we go. Likewise, if there is an emergency, we will step in to make the process as quick as possible when required. - I want to walk us through the current--or former--process to give us some background as to why we face some of the challenges that led to designing the new process. Then we will talk about it to break it down in more detail. ![Cadence Change - Old Process](https://i.imgur.com/G0xoVRv.png) - You can see that the space between Thursday to Friday is cramped. We are trying to get many things done: getting CES bits into the spell, we are looking at payments from delegates, core units, and rate changes. All of that is done in 24 hours. It is risky. And we are doing this on Fridays, which is a bad practice. ![Cadence Change - Old Process Pitfalls](https://i.imgur.com/ViCHvUU.png) - The current process does not allow us enough time to do the Goerli spell first. We do the Goerli spell and the mainnet spell simultaneously, which is not optimal. - We should split those two out, making sure that we have the first deployment, review it, and then move into the mainnet. - That is where the new process will give us a lot more focus and opportunity to make sure everything is correct. - There are also last-minute changes to the spell copy sometimes. We have delegate payments, addresses, and multi-sigs, that need to get added at the last moment. Getting it done can be a challenge with the current process. Again, this talks to 24 hours not being enough. - Industry-wide, it is not desirable releasing on a Friday. It is well known among other engineering organizations that doing so is a wrong move. - It is also unfair to our European and Middle-Eastern time zones, which are getting into the weekend by then. - Lastly, we have to make sure there is enough time for reviewing and accepting PRs from other engineering teams, in this case, CES, involved in collateral onboarding. They also require time to sync with Oracles and with us to do these reviews and get the PRs into the final deployment. [40:47](https://youtu.be/ZJSmzCTSbsA?t=2447) ![Cadence Change - New Process](https://i.imgur.com/SHZ3CSB.png) - What changes for the new process is that GovAlpha will be able to hand the spell copy over to Protocol Engineering on Friday. - In parallel with that, CES and PE will be working on the Goerli spell during the week so that by the end of the week, we got the Goerli spell review ready to be managed and deployed the next Monday. - Then, we write the mainnet spell, deploy it, and it is visible on the portal on Wednesday. - We debated whether we should put it on the portal Tuesday night or Wednesday morning. We settled with the latter because it gives us enough time to mention the executive on Thursdays in the G&R call, and it gives us a good flow to sync with TechOps, Oracles, and other units that need to review it. - I think this flow works well, and we will test it starting this week. You will recall Artem and Payton mentioning that we will not have an executive this week but until Wednesday next week. That will be for delegate payments, BTC-B, and the stability fee reduction. ![Cadence Change - New Process Details](https://i.imgur.com/kt2HkJT.png) - This slide talks about, more or less, what I have mentioned before. I will not go through all this. You get the main point. ![Cadence Change - Key Takeaway](https://i.imgur.com/TWBrKnM.png) - We are still working through the week-to-week cadence. If there is any overlap or pressure, we will communicate it and will be happy to have that discussion with the community. - This has been in discussion for a while. It takes some effort to get all the stakeholders aligned and make sure that we are all on the same page regarding the handover from polls to the copy, to the executive, to the test on mainnet, and so forth. Hopefully, that sums it up and fits with everyone. - One consideration that is worth bringing up is office hours. We have discussed this and considered it when designing the new process. If there is a delay, we could run into the weekend. Similar to what could happen now, which may delay the lifting of the hat. There could be some minor timing issues, but otherwise, it should be as we have stated before. - If you have any questions, I will be happy to answer. Hand it back to you, Thomas. - **Thomas Flitter:** Thank you, Derek. Let us see if anybody has additional comments or feedback. In the meantime, do not forget to visit the forum post that Derek has just put out. We will be looking forward to the next developments on that. ### Request for Proposals #### Thomas Flitter [44:30](https://youtu.be/ZJSmzCTSbsA?t=2670) ![Request for Proposals](https://i.imgur.com/DMZPheh.png) - The next topic we want to discuss is Request for Proposals, emphasizing whether we should have RFPs? The floor is open for everyone to voice their thoughts and provide feedback on this matter. David has another comment to add to this as well. - **David Utrobin:** One benefit of RFPs is that whoever writes them specifies the exact requirements for the level of service we aim for. - Let us take, for example, a Content Production or Marketing team. Presently there are no specific parameters for the services we want in such a team. - Anybody coming from the external world and proposing their team will suggest their vision of what they think we need. - The RFP will enable the DAO to communicate what it needs upfront as a tool. It also creates a clear call to action to the public, opening a window with a delimitated frame for these types of proposals. - RFPs could be an excellent tool to increase the number of incoming proposals, not only to specify the requirements of anything that Maker could be hunting for--whether it is a particular core unit, purpose, fund, etcetera--. Hence, I think it would be beneficial to start using this tool. [47:00](https://youtu.be/ZJSmzCTSbsA?t=2820) - **Thomas Flitter:** LongForWisdom said in the chat that we somewhat saw them implemented in [MIP13](https://forum.makerdao.com/t/mip13-declarations-of-intent/2461), although no one utilizes it for that purpose. Would you like to comment further about that? - **LongForWisdom:** MIP13 defines a sub-process where someone writes a declaration of intent and then submits it to vote. - For example, MakerDAO wishes to hire a Marketing Core Unit in this case. The content of that declaration of intent would go through the conditions in which the DAO wants this to happen: “we expect them to have this, do this, etcetera.” - This is a general process for anything we want to do or want to happen, but we cannot implement it immediately by simply putting it in a MIP. - RFPs are a sub-category of an intention we want to express that we cannot materialize merely by voting for it. - **David Utrobin:** The main difference is that RFPs create a call to action, whereas, historically, applicants use declarations of intent to test the water for their proposals before actually proposing. - In these cases, you usually see people explaining what they are going to do, not the DAO explaining what it wants and needs. - **LongForWisdom:** Exactly. Although, there is no reason for them not to be used as RFPs. Declarations of intent were initially designed for that purpose, not only for applicants to get a feeling before proposing. - **Thomas Flitter:** I am curious to know everyone's thoughts about this. If an RFP goes into the process, who would follow through? Who would handle it? Individual CUs? How would that look? - **David Utrobin:** It could fall under the category of what Delegates can author. They have a valuable point of view of the organization and what it might need. - Growth could create RFPs for our brand; we could do RFPs for anything related to GovComms. - Overall, this is an excellent tool for Delegates to push forward initiatives and needs. - **Thomas Flitter:** Are there any Delegates online who would like to speak on this or share thoughts? [50:42](https://youtu.be/ZJSmzCTSbsA?t=3042) - **Person 1:** As a relatively new member, I think the proposals are daunting. The level of effort that goes into them is towering. We have Discord, but I would appreciate a less formal format. - **Thomas Flitter:** Both Tim and Tim are raising their hands. ultraschuppi, I will go with you first. - **ultraschuppi:** Formalizing a way of doing things is encouraging. It is a good idea to have imagination or applications for work. - It is not like this was impossible before, but investing time in systematizing a method is an easy funnel for people to pitch ideas and, in general, a good move. - **Thomas Flitter:** Tim Black, you had your hand raised? - **Tim Black:** Yes. I want to go back to Long's point and the governance processes we already have with the SPF application for funds. - If we zoom out and try to specify what problems are solved by an RFP, we see two: outlining work that we want to get done and setting a structure we do not have the bandwidth for. - The RFP we are requesting in this open call is an opportunity to prioritize work people apply to in the DAO. - Compound Grants are an example of this. There is plenty of history in open source work that has RPFs. - There is a happy medium where we can use the tools we have in the MIPs and the MIPs themselves while constructing a framework that could be native to the forum or live somewhere else. - That way, we do not have to have it be as formal, and we can brainstorm ideas that eventually result in MIPs. - **Nadia Alvarez:** About what Tim just said, we are sponsoring [HackMoney](https://hackathon.money/), and we needed ideas for the wishlist of what we want the builders to do. - In the past, when sponsoring these hackathons, everyone was integrating DAI as any other stablecoin. That is not something we desired. - We decided to create a wishlist--we shared a form with other CUs, and I will share it [here](https://makergrowth.notion.site/Hack-Money-Projects-d6705b07f2ec439a98aca39ce0a0311b) -- a grants page like Tim suggested, with all the things Maker wants to have in the future. - If you have an idea and want to include it in this wishlist, we will publish it and ask hackers during hackathons and Twitter to start building on that. Please, send us your ideas. - **Thomas Flitter:** Thank you, Nadia. The chat is getting going! Thank you all for your comments. - We will now move on to our next topic: _Prioritization Voting Framework._ I am going to hand this off to Payton. ### Prioritization Voting Framework #### Payton Rose [55:04](https://youtu.be/ZJSmzCTSbsA?t=3304) ![Prioritization Voting Framework](https://i.imgur.com/EMcQ7Gg.png) - This is on GovAlpha's roadmap for this quarter. Our team has been working on something in the past, and we wanted to announce it today. There is an upcoming forum post with further details as well. ![Prioritization Voting Framework - Motivation](https://i.imgur.com/Vk4sTYo.png) - This is because it is much easier to pass things than to implement them. - I made a list compiling all the collateral types and general features that governance had pulled on and approved, and it was nearly a hundred items that have been voted on, but we have not fully implemented yet. - The problem is obvious: the governance mechanism has to pass things they want right now. CUs have a long list of approved features. They say: “our mandate points over to this, and we will keep working on these things and, as more come in, we will try to shuffle them to our priority.” - On their end, CUs have many ways of conveying their priorities. They can add updates, hop on calls like this, host ad-hoc calls, and do the things that also express those priorities. - Delegates, MKR holders, and voters do not have a way to express what they would like to see prioritized for the DAO. - As of now, people say things like: "I think we should be doing this," and the more people pile on that, the greater the appearance of prioritization is. That is detached from MKR voting. - We need a continuous method to see what MKR holders, voters, and Delegates believe the DAO should be putting their effort behind. - A side note before we go on: CUs' internal mandates propose the things that they will work on. Although, we also spend plenty of time collaborating and working on projects with other CUs. That is something that can be optimized by having a prioritization framework. - If MKR holders want something to happen and we are going to spend time coordinating and working with other CUs that are their independent bodies, it makes sense to at least have a list that states that MKR holders want that to happen. ![Prioritization Voting Framework - Implementation I](https://i.imgur.com/pByXak7.png) - Our vision is to have a month-long IRV format and a ranked-choice voting structure. - It will consist of a main prioritization poll and polls with sub-categories if needed. - Delegates, MKR holders, and voters can submit their rank choice and order for things they think should be prioritized. - It will be hosted on the Voting Portal. - We got in contact with Data Insights to be able to provide visualizations to assess how the voting goes. - Ranked-choice will come out with a single victor, but we want to see people's ranked choices and compare those decisions between rankings. [59:45](https://youtu.be/ZJSmzCTSbsA?t=3585) ![Prioritization Voting Framework - Implementation II](https://i.imgur.com/g0qTljC.png) - We will have a weekly update from GovAlpha to summarize the information and remind delegates and MKR holders how the vote is going. This is continuous, over a month process. - As new voters come in and people change their votes, the overall priority will also change. - As far as main polls and sub-categories go, there will be items that require a list of priorities within themselves. - For instance, in the first go-round, we will have a Protocol Engineering technical design as a sub-category and collateral as another one. Including all the individual collaterals or modules in that entire ranking is senseless. - Having MKR voters and Delegates express that adding collateral should be towards the top, or the third most important thing, and then what collaterals they would like to see from that, provides plenty of information for the CU. - The final component will be a monthly relegation process taking the bottom three options in prioritization and having new ones come in their place. - This is to keep the list living and going with new topics from different stakeholders. - We would have one distilled from the CUs, one from the Recognized Delegates, and another from the general community. - This will not be a binding poll. It will be continuous. We want to get the dialogue going to assess what is key to MKR holders and have CUs respond in consequence or effectively inform them why they will not be able, for some time or until a change in scenery occurs, to take action in the desired direction. - This should increase communication, allowing MKR holders a channel to say what they think is crucial regarding coordination between CUs. - Finally, for the CUs themselves, this should become a tool to see what people with voting power think is vital, rather than simply having people commenting, whether in Discord or the forums. - I have seen a few chats come through. LongForWisdom can hop on the microphone to answer, or I will also be happy to do it. - **LongForWisdom:** I think we are asking if the process would change every week. Interesting question. - We see these as communications from Governance to CUs. Governance might change their mind about what their priorities are every week--I suspect they will not, but they might--. That is separate from CUs. They have working priorities. - The idea is that CUs will still set their working priorities, now with more information--quantifiable information from Governance that they can feed into their prioritization process--with which to do so. - I do not expect CUs to change their priorities every week; even if Governance does, that is not feasible. But they can look at that and decide what to do next while working on existing projects. - **Payton Rose:** Priorities may shift, and even if they do in a small amount, that could still be a strong signal. Then again, if suddenly a major world event happens and all the MKR starts going to a single option, that might be a clear signal for the CUs to take a step back and reassess their roadmap. - **David Utrobin:** Another advantage is that this would create a transparent communication about the disparity of expectations. - If CUs think we should prioritize something differently than people voting on a poll. This creates a strong signal that there should be further discussion. - For example, if L2 multi-chain is more important than adding collateral on L1, that would be something to reconcile. - This is a great way to sync MKR voters and Delegates with the workforce executing these desires. [1:05:15](https://youtu.be/ZJSmzCTSbsA?t=3915) - **Thomas Flitter:** Thank you, David. We have got a couple of other comments in the chat. One was about prioritization at a macro level, saying that it could become disruptive if this gets into the lower levels. Was that you, Robert? - **monkey.irish:** Yes, that was me. It is helpful that we are working on prioritization to set direction. But it could be challenging if we get into too much detail, and it turns into a micro-management function. We should keep that in mind. - We develop backlogs and have plans, cadences, sprints, flows, etcetera. It is not as if we do not want to consider something new. If something gets posted, there probably has been some work done on that. - Sure, it is an opportunity to explain that, but we have to focus on things that are helpful for CUs in a broad manner. For instance, understanding general categories of collateral that the community thinks is important in our case. Clear examples are all the ETH and SUB-ETH variants we are going after. To know that that is still a continued high priority for the community makes much sense. Another example: RWAs. - This is just a comment to aim to keep it at a macro level to give us better direction, so we can come together when we do our work as CUs and know that we are tracking together. - **Thomas Flitter:** Thank you, Robert. Any additional comments before we move on to the next topic? - **Derek:** I will add that I am all for getting a better view from people and having this continuously available. - As you and Payton were talking, one thing that came to mind was what DUX has done. They have a board that allows people to up-vote or down-vote ideas. - It enables you to have a quick look, see what people are interested in, and decide on a pace to take from there. Or maybe detect that something currently requested is a resource involved in another process, and we cannot work on it. - Having the conversation around that is OK. The Facilitators would be the main leads for that; it would not be a distraction to the team. I would like to see what kind of tooling you are thinking of. - I see Wouter has his hand up. I will hand it over to him. - **Wouter:** I do not think this would be the same tool you are talking about, Derek. - A feature request board works on a lower level. The discussion about whether this is high level, low, or micro-management is relevant. You need to get it right to get the right signal at the right level. - That is why I would prefer to call this sentiment polling. If there are only twelve topics on the list, and that is for the entirety of MakerDAO, it is unlikely that there is going to be a feature on there saying “we want tags on the Governance Portal,” right? [1:09:15](https://youtu.be/ZJSmzCTSbsA?t=4155) - **LongForWisdom:** Maybe I can clarify this. We consider we cannot have polls with 20, 30, or 50 options. It is not tenable for Delegates or anyone to vote on them. - We feel 12 is the upper limit. We hope to express the maximum possible signal from polls with only 12 options by organizing them around a system of multiple polls with limited options. Combined, they would provide a much more functional signal without having a giant poll with 100 items that represent everything MakerDAO could be doing at any time. - We might, for example, have a poll that is a smart contract resource. It could have something like Kiln within, collateral support as a general item, and PE could do other things. - The idea would be that if, for instance, collateral support is the top-level item, you would also have a poll happening in parallel about which on-chain collaterals you want to prioritize. - You asked about the macro or micro level, which is a good question. I am not 100% sure what makes the most sense with this. My gut feeling is that we would want it on a deliverable level. - In the future, I would like to see DAO direction parameters in polls like these. We could have an item that is green money, for example. Or any other high-level objectives we could take. - But that is a poor place to start trialing a new thing. That is why we decided to begin with concrete things. - **Wouter:** The point is that you cannot make it too specific. Otherwise, you run back into strategy questions. Some combinations of priorities do not make sense if the theme is not the same. - If your options go: "I will build the car's engine or fix the bike's brakes," one is about building a car and the other a bike, you first need to agree on which one to start and keep going from there. - It indeed has to be high-level, as a sentiment poll that shows the general feelings of MKR holders and which direction these are trending on. - Thinking about topics such as how MKR Tokenomics reform is becoming prominent, if we need to push RWAs now, or if we need to go in another direction. On that level, it is probably handy. Once it gets too detailed, you start running into all types of problems, and this would prove not to be the right tool to sort those out. - **Thomas Flitter:** Thank you. Great conversation. This topic will have a greater discussion and has more to come. We still have some time left to explore our last discussion today: _How to improve on follow-through?_ ### How to Improve on Follow-Through? #### Thomas Flitter [1:13:55](https://youtu.be/ZJSmzCTSbsA?t=4435) ![How to improve on follow-through?](https://i.imgur.com/7dzNLTc.png) - We go through ideas generated on the forum and other several channels, and sometimes, they fall to the wayside or do not get pushed through. I wanted to ask the question: how do we know if an idea will move forward or not? - This is something for us to think about: is the follow-through a bandwidth issue? Is it a resource issue? Is it a responsibility issue to take the ball and run with it? - What are the things we can improve on as we embrace an idea and try to take it to the next level? - I want to open the conversation and comments for the entire group today and listen to your thoughts on this. - **David Utrobin:** There is a way to divide this. A part of it is that there are things that the entire DAO agrees need to happen. Those things go on our list of wants. - That in itself is a resource issue. These things could take more or less than six months or even a year to build. - Then, there are things that we want, but there is disagreement around them. For example, the Burn, prioritizing Tokenomics, or DAI liquidity. - Proposals with many disagreements and controversies around them tend to stagnate and dilute over time. - I am curious about how to deal with working through these things that we want but might be surrounded by disagreement. - **Thomas Flitter:** Thank you, David. We have a couple of comments. Derek asked about aligning strategy. Did you want to add to that, Derek? That was a good question. - **Derek:** All these things you, David, and Wouter earlier mentioned: Tokenomics, Burn; it looks like there is plenty of discussion happening in the forum, and it seems like you were getting at how we are not sure in which direction to go in because of the diversity of some of these questions and discussions out there. - There was a comment yesterday in the [DssKiln forum post discussion](https://forum.makerdao.com/t/dsskiln-a-permissionless-token-purchasing-tool/14943) where someone suggested we should have a focus group targeting some of this. - That is a good idea. SES is starting to get ramped up in asking questions and taking the whole strategy query forward. Maybe that is the solution. How can we be quick about doing that? It is all part of that. - ACREInvest, I see you have got your hand up. I will hand it over to you. [1:17:54](https://youtu.be/ZJSmzCTSbsA?t=4674) - **ACREInvest:** Hello, everyone. I was looking for a forum post. I think it was about [intangibles](https://forum.makerdao.com/t/makerdao-intangibles-for-a-better-dao/14860). I wanted to talk about the human side. - We are all humans here, and we have a good deal of discussion about business. We are so _strictly business._ I want to ask: is there anything else we can do as a community to understand how we feel? Do the challenges we talk through have personal dynamics? Is there anything we can do to improve our connections to one another on a human level, to see each other? - We often cannot get together, but I am in DAO communities that are tackling this--I put some comments about this in that thread--and I think MakerDAO could benefit from that conversation happening in concert with some of our strategic work. - There are times when it gets tough. We are all under pressure, yet everyone here works super hard, smart, and driven; it is impressive. - If there is anything that is a potential threat to our success, it is that. We need to pay attention to how we are doing as human beings and our capacity to continue to coordinate and work together because it has to be more than the money. It has to be more the number go up. - We need to think about the interpersonal dynamics of doing this work and how everyone is doing it. - I just wanted to say that. I am the softy of the group! - **Thomas Flitter:** No. That is an excellent point! Sometimes we get lost in the opposite and stop focusing on the interpersonal. Thank you for bringing that. That was a great comment. - David has his hand up. I hand it over to you, David. - **David Utrobin:** Again, there are two levels to this. One of them is within the CU itself. We do at GovComms during each of our standups to have an open-ended question: how is morale? How are you doing? - As the Facilitator, I make sure that my team schedules time off and does not work 60 or 70-hour weeks if they do not have to. They get the support they need. - It is the Facilitator's role to steward the team's morale. - Then, there is this other part which is cross-CU: bonding. - How do we get more cross-CU bonding going? This is an interesting challenge. - It helps to see people in person. Even these calls help. - **Thomas Flitter:** Thank you, David. Appreciate that. We have another hand raised over here. Chris? [1:21:35](https://youtu.be/ZJSmzCTSbsA?t=4895) - **Chris:** There are different answers to this, like David mentioned. From my experience in life, the cheat code to this is not a pretty one: you have to go through hell together. - It does not matter the group you are with--and maybe this answer is part of the larger question about follow-through and people forming subcommittees to get things done--: in my experience, we form strong bonds through extreme adversity. - The more we experience that together and tackle difficult problems as and across CUs, the stronger those bonds are going to get. - It is not pretty, but the result is spectacular. - **Thomas Flitter:** Thank you for that comment. Another hand raised? - **Person 1:** Yes. I wanted to applaud Kianga for saying that. It is a crucial aspect that usually gets pushed to the side because it is not clean and measurable. I think it is vital, and I would love to see an ongoing discussion on that. - **Thomas Flitter:** Thank you. We are getting close to the end of our time today. A riveting topic to keep exploring: the human element, the relationship-building we have, not only for our business needs but also for the interpersonal aspect. That was a great discussion. Payton, I will hand it back to you. Thank you. - **Payton Rose:** I appreciate you facilitating the discussion segment, Thomas. Nice to have you on the microphone and the camera for the call. [1:24:06](https://youtu.be/ZJSmzCTSbsA?t=5046) - **Payton Rose:** We do not have much time for open discussion. Thank you all for sharing. A lot happened today. Please check the forums. We will keep it going there as well as in the chat. - We will be around the same time, same place, next week. Thank you so much for attending. [Suggestion Box](https://app.suggestionox.com/r/GovCallQs) ## Common Abbreviated Terms `CR`: Collateralization Ratio `DC`: Debt Ceiling `ES`: Emergency Shutdown `SF`: Stability Fee `DSR`: Dai Savings Rate `MIP`: Maker Improvement Proposal `OSM`: Oracle Security Module `LR`: Liquidation Ratio `RWA`: Real-World Asset `RWF`: Real-World Finance `SC`: Smart Contracts `Liq`: Liquidations `CU`: Core Unit ## Credits - Constanza produced this summary. - Larry Wu produced this summary. - Everyone who spoke and presented on the call.