Meet Your Delegate: Episode #07

--- tags: Meet Your Delegate --- # Meet Your Delegate: Episode #07 ## Agenda - [00:00](https://youtu.be/brNkBB33H84): Introduction - [01:00](https://youtu.be/brNkBB33H84?t=61): JustinCase - [06:14](https://youtu.be/brNkBB33H84?t=374): Core Values - [12:05](https://youtu.be/brNkBB33H84?t=725): Working Methods - [30:27](https://youtu.be/brNkBB33H84?t=1827): Conclusion ## Video <https://www.youtube.com/watch?v=brNkBB33H84> ### General Introduction #### LongForWisdom [00:00](https://youtu.be/brNkBB33H84) - Hello to everyone. Welcome to MakerDAO's Meet Your Delegate episode #07. Today we are meeting JustinCase, one of our hopefully newly recognized delegates. - To do a brief overview of how these meetings run. The delegates do a presentation, introduce themselves, and talk about their platform. The rest of the time goes to the audience to ask questions, and the delegates will answer them. This meeting is being recorded. Please, do not talk over each other. We encourage questions. Feel free to chime in. ### Delegate Introduction ### JustinCase [01:00](https://youtu.be/brNkBB33H84?t=61) ![JustinCase/Delegate Platform](https://i.imgur.com/9krRjDW.jpg) - Thank you very much, LongForWisdom. I am excited to be here. It is a little intimidating to give this presentation since I have been coming out of the shadows as a lurker recently. I will do the best I can. ![Background](https://i.imgur.com/QwPnAuZ.jpg) - We will start with a bit of background. One of the reasons I am going by JustinCase is because I am Norwegian. This means I have a name that I have yet to hear any English speakers have any chance of pronouncing correctly. It is also to not make my identity known, given that we are in the crypto space. If anyone wants to get my real identity, I am happy to write that on a more private channel. - My background is in business management, before that military. I am probably coming at this from a slightly different angle than many people in this space. There is some value there. I have something to contribute to coming from such a background. I am also a smaller investor. I started investing way back in 2007. Then I started with crypto back in 2017. If anyone sees a pattern emerging, yes, there is. This has given me an appreciation for the risks involved. The arrows do not only go up. They also go down and sometimes dramatically. That is a valuable experience to bring into this role. We need to prepare for the bad times, even when everyone is having a party and making lots and lots of money.I am early to the party with Maker. I got my first makers way back in 2018. It has been quite a ride. It has been very interesting. There is still a long way to go for Maker. ![Motivation](https://i.imgur.com/aa4pKcE.jpg) - Why am I doing this? It ties a little bit to get into Maker in the first place. When I started with Maker, as I am sure many other smaller investors did, we got the elevator pitch. Elevator pitch is that MakerDAO is a protocol generating revenue by lending out its stablecoins and using that revenue to burn it. I am sure everyone here is aware that there has been a discussion going around Surplus Buffer as of late. The increase in Surplus Buffer has resulted in the burn being off since way back in early June. The voices I have been hearing and reading around echo some of my sentiment that this is a little bit damaging to Maker's reputation since the elevator pitch seems such a central part of Maker's value proposition that prolonged periods of no burn are seen as a breach of contract or leads to a loss of investor confidence. - I wanted to give that sort of concern of voice. I also wanted to be a part of the community and contribute in a way I have not been doing before because, as luck would have it, I have recently come into a lot more time than I am used to having. I have more possibility to contribute. Some of you may have noticed that I have been popping up around the forums, voicing some opinions, solutions, and maybe some questions. I can at least provide some perspectives in doing so. Of course, everything is down to the votes and how we all react. There is some value in putting more voices to the table. - Lastly, it is communicating. Today, Maker has a little bit of a barrier to get into. Coming from a smaller investor's background and a business management background, I might be able to translate, for less lack of a better word, some of the more technical parts into something more understandable for someone who does not have 10, 15 hours per week to browse the forums and stay on top of everything. #### Core Values [06:14](https://youtu.be/brNkBB33H84?t=374) - This leads me to three core principles or values that will guide my decision process as a delegate. ![Core Value: Maintain Obligations](https://i.imgur.com/IitXASQ.jpg) - The first one is maintaining obligations. This is a very important business principle, and even more in the crypto space, where one of the usual ways of enforcing contracts is absent because we are operating in a space that is not regulated so far. The weight of our word means a lot. We build trust by honoring commitments, and trust is essential for adopting and using the protocol. The very foundation of the protocol is stablecoin. If people do not believe that we will honor the one-to-one stablecoin promise, the whole protocol will fall apart. That trust can also be eroded from other things than losing the peg. It can come from perceived broken promises. Trust is a concept that is hard and gradual to build. You usually start with some base trust. Then you need to prove that trust over time and build that trust with other actors. It is a long and slow process. It takes much time to build trust, but it is a rapid process to destroy it. You do not get to make many missteps before you start to lose a lot of trust. You can see some of that in the aftermath of Black Thursday. These kinds of events, like the big events, will take a lot of trust. You can also gradually erode trust if you are not living up to the obligations you had taken on. A more recent example can be seen in the discussion going around the offboarding of the MATIC token, where you have parts of the MakerDAO who have committed to another protocol. And there is disagreement whether those commitments have been met and so forth. Even the act of bringing up a potential for offboarding them can be seen as a breach of commitments. In such a case, my base attitude would be not to offboard such a thing as long as there is an explicit or implicit obligation to be had. ![Core Value: Growing Profits](https://i.imgur.com/qd5e8iG.jpg) - The next core value is growing profits. Growth for its own sake is good. I want to see Dai become the leading stablecoin in the crypto sphere. In order to do so, we must also maintain profit growth. The profit growth keeps Maker holders invested and aligns our interests with the Maker holders. Therefore, I will look to any proposal and see if this is helping on the path to growing profits. One way of growing profits is also cutting expenses. We are not in that particular place for MakerDAO just yet. We are still in this early startup innovation phase where it is more important to foster innovation and creativity than curb costs. I would instead focus on increasing revenue rather than reducing costs at this stage. We have a winning proposition as long as we can increase revenue more than increase the cost. That is going to be the case for quite a while yet. As an extension, the most significant potential for MakerDAO going forward is in RWF. There is tremendous potential there if we can do it right. There are pitfalls we can go into along the way. ![Core Value: Simplicity](https://i.imgur.com/dggZy35.jpg) - The last one of my core values is simplicity. We are in a very innovative space. There is a lot of good ideas floating around. It is prudent to weigh complexity against what is being proposed. If I choose between a complex and a less complex solution, I will favor the less complex one. If several systems are trying to do more or less the same thing, I would want those merged into one rather than having separate systems. I would avoid too many external tokenized systems and anything that adds complexity. Every time you add complexity, you are at risk. The more complexity you add at the user end, the higher the threshold for using MakerDAO. I will favor less complex solutions if they are presented. - Those are the three core values and principles that will guide my decision-making. If anyone has checked, I have already started doing some votes and putting these things into practice to reason why I am voting the way I am voting. I am trying to refer to these principles and what has been weighing the most in that decision. #### Working Methods [12:05](https://youtu.be/brNkBB33H84?t=725) ![Working Method: Communication](https://i.imgur.com/buzYzvt.jpg) - That leads me to the last part that I want to talk about, which is not a principle. This will not guide my decisions per se, but it is about my method of work, and it goes into communication. - There is something you can see an example of in my reasoning for my decisions, which is communication. We have to bridge a gap when it comes to communication. I will make it my job to make my reasoning as easily understandable as possible. I am going to try to refrain from using abbreviations. I will try to refrain from using too many technical terms if there is a simpler way to explain the discussed concepts. My goal is for anyone to go and read this reasoning and have an understanding of why this is happening. Even people from outside who are not familiar with the forums or with different technical terms can go in and get some value out of reading those reasonings. - I will try to be active on other platforms and communities, especially smaller investors, and explain Maker. I will try to drum up enthusiasm for Maker. I will try to make Maker more accessible for lesser actors. We are doing ourselves a disservice if we are putting too high of a bar in this, and if we are catering, to a large extent, to existing users, then we will hamper our growth. There is much potential in people who are not already using the platform in the crypto sphere. That is where our greatest growth potential lies. Once collaterals rise in value, existing holders will have more opportunity to mint more Dai the way the system is constructed right now. We can expect some growth there. If we want to see the kind of growth we have been having so far, we need to reach into other segments of the crypto population and try to track those, and in that, we need to have easier and more understandable methods of communication. - That was my prepared written introduction. I hope there are some nice questions that I can answer, and I hope I have some good answers for you. As I said, this is a little bit intimidating because I have been listening to a lot of very intelligent people with a very deep knowledge of all these systems speak and write their opinion. I am not coming at this from a technical background. I am coming at this from a business background. I might not be as well-versed in those particular technical details just yet. I am fortunate enough to have much time to devote to this. I can only get better as I read more. #### Questions [15:31 - Seth Goldfarb](https://youtu.be/brNkBB33H84?t=931) - One of the ongoing challenges in the DAO is figuring out how to deal with things that traditional businesses enjoy. For example, a framework to get legal advice and act on that. There is much weirdness because different CUs can get different advice, which differs from the DAO getting advice as a whole. There are other examples like HR and even operations in general. Coming from your background in management, have you had the chance to think about the quirks of operations and management within a DAO versus a regular organization? - It is a very cool question. In MakerDAO, you have a very flat structure and several autonomous units. You have a coordination problem. As you rightly point out, you would have more of a hierarchy of this in a more traditional business. You would have more specialized units taking care of accounting, legal advice, HR. But we are trying to build a decentralized organization. Part of that is trying to live with some of these pains and figure something out. I see some good things going forward with some of the strategy meetings trying to put more coordination into the effort. That is the most important thing to sort out first. Maybe some of these support functions could be more their CUs, and other CUs could interact with, which might be a way forward. We have to figure out some way to set more followable objectives before the CUs to have more guidance on where they want to go. When it comes to legal, it is a pretty complex issue. One thing is getting legal advice, but the first question when getting legal advice is for which jurisdiction. The US will be a very important jurisdiction, but MakerDAO could potentially be embroiled in legal disputes in any jurisdiction in the world. Already there, you have some issues on how to tackle this. There is some value in having this experimental approach to the whole thing. We are working on the frontier here. This is uncharted land. If we can develop workable solutions that can satisfy legal stakeholders, we are well served by making our own rules set and presenting this to lawmakers otherwise. When it comes to legal issues, the primary concern different governments have is that they want to protect their citizens from scams and economic instability. These are the major issues that governments hold. This is getting a little bit long-winded. Let us go back to the organization. It is a challenge. I can see the challenge. We have to live with it and feel our way forward. [20:04 - Payton Rose](https://youtu.be/brNkBB33H84?t=1204) - You mentioned the Surplus Buffer being burning and that being important. Do you have a mental model or a way to determine an appropriate Surplus Buffer? Risk might say they tend to look at a percentage of non-stable assets. Others might argue for a multiple or a fraction of projected expenses. Going forward and voting on those, is there any model you are sticking to for considering the Surplus Buffer size? - There are several claims to the Surplus Buffer, if you will. There are other competing objectives on this one. A very retailing example is that we discuss releasing the Surplus Buffer from a risk management perspective right now. We want to keep it at a certain percentage of the outstanding funds, which is a very understandable position. I have no problem with that. At the same time, we have this perception that a prolonged period of no burn is bad for our reputation, losing investors' confidence, and so on. We are also using this one for running expenses. We have Oracles coming in soon and removing a fairly substantial chunk of the Surplus Buffer. This is also a risk-mitigating measure because they need the funds to put up their risk fund to make sure they have gas to cover the Oracles costs. Risk needs to play a central role in determining an appropriate size in many ways. If Risk argues that we need a certain percentage, I will support that as a target. But there is a timing issue, and how are we getting to that target? When you put it up together, we need to compromise between these different stakeholders and their interest in what we are doing with a certain buffer. Say the Surplus Buffer, according to Risk, should be two and a half percent, and that would today mean 190 million. That is one risk. Then you have the Oracles, which need their money right now. Should we reduce the Surplus Buffer even more? We have to make a compromise between these different risks. Accept that we may be going on with a slightly higher risk than we want to, but we are working towards closing that gap. In this particular case, I would agree with Risk on the target, but I will be arguing for a more gradual response, which we have seen a discussion about already. Ideally, I would want this to be based on percentages. I know there is a technical limitation to doing that. We are forced into this, either all or nothing scenario. Some days, we are not going to burn anything. Otherwise, we are going to burn 100%. Overall, we might end up at a certain percentage. With that, we still run the risk of making that decision based on the criteria as they are right now. Assuming the bull market holds, maybe with the current data or settings, we will end up with a burn of 60%. But two weeks downline, suddenly our profits have grown by another 10 million a week. Now we are burning 70%. It is a bit unfortunate. I would rather set a percentage limit and leave it at that. You had seen the flip side of that whole thing in June when you had this compromise that we wanted to burn about a third of the profits. It worked well for a few weeks, and then suddenly, the revenue fell off a cliff. As expenses rose, the profits fell. We needed to increase the Surplus Buffer, and all these events together conspired to have a prolonged period of no burn. Let us make this concrete in the coming days because we have some actual polls on this. For the coming time, the funds needed for the Oracles have to go, which means that we will see a drop in the Surplus Buffer for the coming few days. For the coming vote, I am most likely going to vote against not increasing at this time because I would ideally want to refill the Surplus Buffer up to the 60 million that we have right now and then start racing the buffer at a gradual burning pace to make a meaningful compromise between these different objectives. [25:36 - Jerry Goldfarb](https://youtu.be/brNkBB33H84?t=1536) - I wanted to ask you about the delegate compensation situation. Right now, we have the trial for delegate compensation happening. Do you have specific feelings about the way delegates should or should not be compensated, as well as to what extent?] - This is a question that is not well suited to be answered by a delegate. The question of delegate compensation is a conflict of interest in its very nature. In these kinds of discussions, I would prefer someone else to do the discussion and arrive at a meaningful conclusion. Even the most virtuous person can argue as well as possible, but it is impossible to do this without being biased. You are directly benefiting from whatever is being proposed. I will say this, though, delegates should hold a meaningful amount of Maker. That is part of aligning their interest with the interest of the protocol. Delegates should have skin in the game. I have skin in the game. It is not a lot, but it is around two years' worth of salary to me. It is meaningful, should that go tits up. That would be a meaningful financial loss to me, and I have incentives to make it a job in the long run. That is something that should be criteria for all delegates to align interests. Maker should be locked up for a while, as long as you serve as a delegate. And maybe a year or two after so that you are making sure that everyone is acting in good faith and acting for the good of the protocol. [28:02 - Payton Rose](https://youtu.be/brNkBB33H84?t=1682) - Does your pro-burn sentiment apply to MKR as well, in terms of vesting? Would you be against the protocol minting MKR for vesting purposes?] - I can see where you are coming from. However, part of the Maker story is this notion that there is a million MKR minted. It is not entirely true right now, but there is some value to the optics of MKR having a set pool, and this pool is constantly shrinking. We run an additional risk by minting. To do a business parallel, a company issues and buys back stocks. In effect, minting and burning MKR are some of the same mechanisms. This whole idea of this one-round number will shrink, and it will increase the value of MKR holders. It is too valuable to mess with. My initial stance would be to not mint more Maker for vesting. [29:29 - LongForWisdom](https://youtu.be/brNkBB33H84?t=1769) - Thank you to everyone for the questions. Thank you, Justin, for taking your time to speak to us all. Before we finish, are there any shoutouts you want to do? Any links to forum accounts or Discord accounts? Anything you want to share? - I just want to say thank you to the whole community. It is a very enthusiastic and knowledgeable community, and it is very inspiring to interact with. There are so many people so vested in the success of this project that I am really happy to have this chance to be part of it. These last few weeks, when I have been dedicated more or less full time to this, it has been extraordinary. I cannot wait to keep on doing that. - Awesome. If people want to contact you on Discord on the forum, are you JustinCase? - Yes. ### Conclusion #### LongForWisdom [30:27](https://youtu.be/brNkBB33H84?t=1827) - We will get you up on the UI very soon so people can start delegating. Thank you, Justin. Thank you to everyone for joining us. I will hopefully see you all at the next meeting. ## Common Abbreviated Terms `DAO`: Decentralized Autonomous Organization `RWA`: Real World Asset `DeFi`: Decentralized Finance ## Credits - Kunfu-po produced this summary. - @gala produced this summary. - Everyone who spoke and presented on the call, listed in the headers.