Episode 190: May 12, 2022

--- tags: G&R --- # Episode 190: May 12, 2022 ## Agenda - [00:03](https://youtu.be/jK2VtNUHuGE?t=3): Introduction - [02:11](https://youtu.be/jK2VtNUHuGE?t=131): Votes and Polls - [03:27](https://youtu.be/jK2VtNUHuGE?t=207): MIPs Update - [08:19](https://youtu.be/jK2VtNUHuGE?t=499): Forum at a Glance - [18:32](https://youtu.be/jK2VtNUHuGE?t=1112): Initiatives Update: Unified Auctions & Auction Keeper Demo - [38:54](https://youtu.be/jK2VtNUHuGE?t=2333): Discussion: Asset, Liabilities, and Liquidity Analysis - [01:11:08](https://youtu.be/jK2VtNUHuGE?t=4268): Open Discussion - [01:31:03](https://youtu.be/jK2VtNUHuGE?t=5463): Conclusion ## Video [Link](https://youtu.be/jK2VtNUHuGE) ## Introduction ### Agenda and Preamble #### Payton Rose [00:03](https://youtu.be/jK2VtNUHuGE?t=3) - Welcome to the 190 Governance and Risk call here at MakerDAO. My name is Payton, I go by Prose11 online, and I am one of the Governance facilitators. We are here at our weekly call, and we discuss things relevant to what's going on in the protocol: risks we are facing, current votes, and initiatives. We will go over a couple of the ground rules. As you might have noticed, this call is being recorded. We encourage open participation; please ask questions, and give comments. A couple of facilitation tools would help me if you are attending live. Number one is the raise hand feature on Zoom. If you have something you would like to add to the conversation: raise your hand, and I can work with you in the next moment. If you are unable or unwilling to hop on the mic, you can utilize the chat. - Regarding the agenda, as usual, we will start with our Governance round-up going over the votes and updates on the Maker improvement proposals and what has been happening in our forum. - Today, we will talk about the demand issue for Dai (main topic), the current state of the market, and how that affects it. ## General Updates ### Votes #### Payton Rose [02:11](https://youtu.be/jK2VtNUHuGE?t=131) *Polls:* - 2 Ongoing Greenlight Polls (Voting ends May 16th) - ATDC (ATD Combustors) - IPCL (India Power Green Bonds) - 5 Ongoing Ratification Polls - To be covered in MIPs *Executive:* - Recognized Delegate Payments, Lowering WBTC Stability Fees, and Onboarding wstETH-B, 64,700 MKR Supporting - Next Week's Expected Content - Foundational L2 Work - Core Unit MKR Transfer ### MIPs #### Gala [03:27](https://youtu.be/jK2VtNUHuGE?t=207) ![](https://i.imgur.com/zXSPJx9.png) - This is Gala from GovAlpha; I am presenting MIPS for this week. On Monday, we had five proposals that entered the main governance cycle. We can take a look at the votes so far. Yes, it is the leading option at 100% for all proposals. ![](https://i.imgur.com/5RTMtj3.jpg) ![](https://i.imgur.com/042kwER.jpg) ![](https://i.imgur.com/VIHPPDD.png) - We have one Core Unit on-boarding for lending oversight Core Unit. Love intends to support the DAO in its evolution to become the central pillar of DeFi by facilitating the sustainable onboarding of 10s or hundreds of billions of more complex use cases. One facilitator on the on-boarding proposal for a second note for the minify security Core Unit for facilitator on-boarding and off-boarding. For the data insights CU, there is a voluntary facilitator off-boarding from Thomas, and he hopes to be succeeded by Taddeo, for whom we have a facilitator or on-boarding proposal. ![](https://i.imgur.com/VCnQ1is.png) - We have two amendments going on. One that has been going on for a while is the Core Unit Offboarding Process Amendment: we are still working on that, and hopefully, we will be posting on the forum soon the updated version, and there is one amendment to MIP16. These amendments are just the governance of the weekly governance cycle, so the governance Cadence from executive proposals posted on Friday to this posted on Wednesday. ![](https://i.imgur.com/q0rAgUF.png) - These budgets use the new yet-to-be ratified Core Unit budget process. ![](https://i.imgur.com/MKb4GsB.png) - Finally, Maker Shire Hathaway is a special purpose fund that intends to experiment with various yield generation strategies. - The ratification polls that are up will post in less than two weeks on May 23. Please vote if you have not done so yet. For the governance cycle, remember that the formal submission window opens on June 6. ### Forum at a Glance #### Artem Gordon [08:19](https://youtu.be/jK2VtNUHuGE?t=499) Post: [Forum at a Glance: May 5th - 11th, 2022](https://forum.makerdao.com/t/forum-at-a-glance-may-5-11-2022/15154) Video: [Forum at a Glance](https://youtu.be/jK2VtNUHuGE?t=496) ## Initiatives Update ### Unified Auctions #### Lucas [18:32](https://youtu.be/jK2VtNUHuGE?t=1112) - I am happy to give a brief demo on the current state of the Unified auctions Dai. It was not planned to have these recent downturns of the markets for us to give an update. If you want to frame it as a good or sad coincidence, I would say it. Another quick disclaimer, this is a pre-recorded walkthrough. Please hold your questions for the end. What you can see here is our landing page. During our work on the auctions, we figured that there are many tools and services related to the auctions, and all provide relevant information. We started to collect and list them here on this page so that this page might become an entry point to the broad realm of options in the future. - The list is filtered based on the auction type you are selecting here at the top; I have chosen that one since we focused our work on the collateral auctions. Without further due, I want to jump directly into the collateral auctions portal that we built. - We are building with a focus on accessibility in terms of the UI itself and our codebase. One of the design decisions that we took back in the day was to have this narration base flow that provides relevant context and allows the user to read basically from top to bottom, to understand what is going on and what this whole thing is about. - The experienced user can always switch to the expert mode via the toggle at the top, hiding all of this extra context information. I will stick to the explanation base mode. For now, a core piece of this page is the table with active options that allow us to participate or interact with one particular option. Don’t be confused by all of these options down here that need to restart. This is because I am currently on Gurley for this demo purpose. - One of the principles in our building process is never to leave the user in the dark. A small example is this small indicator here at the top of the table informing when the table was updated last since we research auction information every 30 seconds. Now let's look at one particular auction: it is provided by this auction page. Here at the top, you have a table with all relevant auction information: when the auction ends, the auction amount, the current auction price, also this tiny spinner here that gives them information on when the next price drop is going to happen and what the next price struggle will be. - Then you have a couple of more information on this particular option. I do not want to go into detail about each row right now. The important part here is that the user can now decide how to interact with this option. We provide both ways, either bringing our funds to the table and bidding on the collateral with our own Dai or via instant settling without any capital requirements, using the flash loan-based option participation. [22:44](https://youtu.be/jK2VtNUHuGE?t=1364) - This is the flow that we introduced first. - Nevertheless, I want to quickly update the improvements and adjustments we made to this one. We optimized this final transaction page to provide as much information as possible to the user and also for the user to make an informed decision about the auction participation. - Again, we want to prevent leaving the user in the dark about what is happening. Let's quickly look at some of the information displayed at the top table. Again, you can see this price spinner that we have seen on the previous page already; then, we just played the price on UniSwap. - Since we are finally aiming to exploit an arbitrage opportunity once the auction price falls below market price. Now don't be confused about this very low eath price: this is because I am using test origin on girly for demo purposes. We also display that it will likely not be profitable at all for the estimated profitability time. Usually, we would show a timer that indicates when the auction is turning profitable, meaning when the auction price will fall below the market price. - We calculate that based on the step and cap parameter from the Abacus contract for this collateral type. There are the important indicators of transaction cross profit and net profit, meaning the profit after transaction fees. Here we display the combined transaction fees. - This means that we consider whether the required authorization steps for the wallet have been made already. If not, they are included together with the fees for the actual execution at the end of the course. Speaking of the general steps that the user needs to make to execute the final auction transaction, we recently introduced this panel-based approach that you can see here. This approach wants to guide the user throughout the flow and give hints on what step needs to be executed next and what is currently preventing auction participation. As a simple example, if I now disconnect a wallet here, you can see that this panel is expanded, hinting to the user that no wallet is connected currently. If I reconnect my wallet, everything looks good. - Same for the two authorization transactions that are needed. They have been executed for this wallet in the past, so they are checked. If one of the steps is missed, this panel would be extended with another alert notification to the user that he needs to authorize. - First, to finally execute the automation section. We are currently showing the only alert that the transaction gross profit is negative. This is also why we prevent auction execution. The next execution with a negative transaction cross profit would result in a reverted error. Now let's turn to the previous page and look at the other flow to participate in auctions. - Bidding on an auction with old Dai funds was the feature that we lacked to have feature parity with the old liquidation portal. Now that we have introduced this feature, the old liquidation portal is deprecated, and it has already redirected to the unified options UI that we can see here. This bidding with its own Dai flow follows a similar design pattern to the flash loan-based auction participation flow. - However, of course, we have different interaction possibilities for the user. Again, at the top, we have general information on the auction. And then, the most important interaction piece is handled via this input field here, where the user can specify the amount in Dai he wants to bid on the collateral. The maximum amount to bid is set via the temporal match parameter, which is the debt that needs to be recovered by this auction. - The user can always set it by clicking this link. It is also the bid amount prefilled by default, but then in this user, I can specify an amount I want to bid. I will get an indication of the amount to receive of the collateral. We also cover different edge cases via this input field. There is a minimum leftover based on the trust parameter, meaning that the user cannot specify a bid amount that is slightly under the maximum bid because then the auction would result in a leftover that is lower than the minimum leftover. It would be an option that is no longer attractive; we can try that out, specifying the input amount here to 52k. We also display in this tooltip here that this value can only be less than the maximum bid minus the minimum leftover, which is the 47.5k indicated here or the maximum bid. - I will go with the maximum bid, for now, to look at the other elements of this flow. Again, we have our panel-based approach that guides the user throughout the flow, and it also checks whether all of the pre-requirements to add finally bid on the auction are successfully fulfilled. [28:54](https://youtu.be/jK2VtNUHuGE?t=1734) - This is the case for the wallet at hand. It also covers the two authorization steps we know from the flesh loan-based auction participation. An additional prerequisite here is a sufficient Dai amount deposited, which is covered via a panel. You can see the figures Dai amount in the wallet attend the amount of Dai that is already deposited to the VAT. - In this case, it is enough to cover the specified bit. Otherwise, the user would be notified by a red message saying that more Dai needs to be deposited first to place the bid. With the whole interaction with the vat, depositing and withdrawing Dai to and from the VAT is facilitated via the pop-up that you can see here. Same approach down here with the panel-based design, a user can specify the amount that needs to be deposited. Suppose this amount exceeds the amount of Dai available in the wallet. In that case, depositing is disabled, and the user is notified why that is, in this case, there is no sufficient amount of Dai present in the connected wallet to do this transaction. Same for the withdrawal. The last part of the whole flow is: once the user has placed a successful bid and obtains the collateral via this auction, the user can withdraw this collateral from the bat to the wallet via the button. - In the case attend, I have participated with this wallet in previous options. For example, I would now be able to withdraw 1.05 Eth from the vat to the wallet at hand. As a last remark, a user can always manage Dai in the vat by the pop-up he has chosen; it's also accessible via the header. There is no reliance on an active auction. - This can be done at any time by the user. The same holds for the withdrawal of collaterals. From the right to the wallet, it’s facilitated via the pop-up that you can see here, where the user can withdraw collateral. Still, the user can also pre-authorize certain collateral types via this pop-up. - For example, to use low gas prices, when there is no active auction, you might wonder why we display here certain collateral types that are already onboarded. This is true, but we are not hard coding the collateral types but fetching them automatically from the chain block contract. - This is for an overview of the current state of the Unified auctions UI. Feel free to give feedback. It is always welcome. I hope you're still sticking with me because, as the last agenda point, I quickly want to jump into our repository and give you a sneak peek at the keeper implementation that we have done. - Our keeper implementation can be found within our open source repository unified origins UI. The main idea from the beginning was to have this modular approach with a folder that contains the core logic and can serve both the UI that I just demonstrated and the keeper implementation, which can be found in the bot folder. I will not spin up the keeper now as part of this demo. Instead, I will refer to the readme of this folder, where the information on how to set up the bot and what environment variables can be set to configure the bot can be found. - To quickly walkthrough: we are currently only supporting a project ID but actively working on the support for custom RPC URLs. Then one needs to specify the Ethereum network the bot will run on. One can whitelist certain collateral types. An operator can also specify the max priority fee that is passed the refreshing interval for the bots to fetch the auctions. Then, besides a private key, an operator also has to specify the minimum net profit of an auction before the keeper will bid on it. Thanks for listening. Now is the end of this demo. I hope you enjoyed it a little bit. Feedback is welcome as always. [34:08](https://youtu.be/jK2VtNUHuGE?t=2048) - Prose11: I see a question in the chat: Are we tracking UI usage now in the market? Asking if we can tell when users are using the UI to participate? - Lucas: Yes. We did fetch all of the events, for example, that happened this week to give some numbers on that. There were 200-250 auctions taken. As a proxy, we investigated which of these events used the colleague contracts. The number was 47, which is the proxy you can work with. Since the UI uses this call the contract, our keeper uses it, and also the auction demo keeper, this is an approximation of the actual usage: it’s not limited, as I said, to the UI itself, but it could also be that the keeper was used or the auction demo keeper. That is the closest number that we have right now. - In this folder that you could see during the demo, there are also Twitter bots that we have placed. We are tweeting about every auction that is started, and of course, we real-world grow. ## Discussion ### Asset and Liability Management #### Sebastien Derivaux [39:25](https://youtu.be/jK2VtNUHuGE?t=2365) ![High Level Perspective](https://i.imgur.com/3EkAIjX.jpg) - This is an update of a post I made on the Forum about the evolution of stablecoin liquidity in MakerDAO to see what’s going on since the 15th of February when we were almost up to 10$B DAI. - **Why is it good to have liquidity?** Because that’s one way to make sure that 1DAI equals 1 dollar. That is the best tool we have to defend the DAI, so we don’t get it below 1 dollar. - Obviously, it’s the same when DAI goes up above 1 dollar, but that’s not an issue because there are always people that can deposit USDC in the PSM. - There are other tools, but this one is the best to defend the DAI. We started in a situation where we had 6B of stablecoin liquidity in mid-February, and that was a lot. That is not specifically good because it means that all those USDC, GUSD, and USDP are not doing anything and not generating revenues, which doesn’t allow us to increase the DSR or burn some MKR. - It wasn’t a perfect situation, but it was very safe. Since then, some people have repaid loans; and when you are repaying a loan by sourcing new DAI, you are increasing the PSM because, if you repay the loan, the DAI’s demand usually stays the same. Repaying your loan means that someone else has to deposit one USDC in the PSM. - That resulted in a 1B positive effect on the liquidity, but that wasn’t much compared to all the other red effects, being Dex LP the biggest. - Then, we have bridges and DAIs that were used on L2 or side-chains. - Landing protocols are also decreasing the usage of DAI for many reasons, but maybe because we are in a bear market, there is less demand to borrow. - Today, we are at just below 3B of liquidity, which is a lot since we have only 6B DAI issued. This is a very good number, and there is no stress on this side. ![Main Borrowers Evolution](https://i.imgur.com/hrnOFLO.jpg) - [Here](https://youtu.be/jK2VtNUHuGE?t=2607), you can also see the evolution of the VIP borrowers that we track because we know their addresses. Many **Nexo** and **Celsius** and **7-Farmer** have reduced their loans and borrowings from MakerDAO, being **Gnosis** the only one that has increased. - While 7-Farmer is using DAI and keeping those to do some yield-farming activities, Nexo and Celsius are lending US dollars to their clients, so when they repay their loans, they are sourcing DAI into the market and increasing the PSM. ![Dexes - Curve Specific Situation](https://i.imgur.com/AqUD3SN.jpg) - [This third slide](https://youtu.be/jK2VtNUHuGE?t=2693) shows the amount of each asset owned by the Curve 3pool. - On June 1st of this year, there was almost 6B of assets in the curve pool. This big liquidity is due to the incentives of Frax and Terra. - Going forward, you can see it was decreasing but still keeping a good healthy proportion of each stablecoin, and even in February, there was less USDT than others. - Starting this week, this imbalance of USDT was counterbalanced. This morning, USDT was traded up to 95 cents, so the pool was depleted. - As a side effect, we had almost 2 billion DAI at the beginning of the year in 3pool, but they are no longer there; they were swapped for something else. That means a demand of 2B DAI was removed, so the PSM is decreased by almost 2B. ![Other Chains/Bridges](https://i.imgur.com/a2OTswh.jpg) - [This one](https://youtu.be/jK2VtNUHuGE?t=2784) focuses on other chains and bridges. We have here: - **Avalanche**, where we lost 76% since the 15th of February. - Two main reasons: the impact of Stargate and a change in the incentive structure of Aave’s AVAX. - **Fantom**, where there is a 58% loss due to Solidly. - **Polygon**, not too much DAI-related and more stable, but with a -48%. - All this explains much of the loss in those subjects. - Bottom line: those DAI were migrated to those chains to get liquidity farming, and when the liquidity farming started, those DAI just disappeared because there was no reason to get those DAI back. ![Lending Platform Usage](https://i.imgur.com/pg0Mm4t.jpg) - [Here](https://youtu.be/jK2VtNUHuGE?t=2895) we have the lending platform usage. - I don’t follow much Cream, so I don’t know why there is no DAI anymore. - With Compound, there has been a decrease in market share since the beginning of the year. One reason might be that Aave has become more relevant and profitable. ![What should we do?](https://i.imgur.com/zSIpP8P.jpg) - [This](https://youtu.be/jK2VtNUHuGE?t=2959) is a summary slide about where we are now and what things we should do. - Looking at the chart at the bottom left, you can see where DAI is located, the exposure, and the usage of DAI on-chain on Ethereum. You can also see the landing protocols (Dex, bridge). - Looking at the purple side of the bars, you can see externally owned accounts: those are growing (or at least not shrinking). And this effect has been going on for an extended period. It is unclear why DAI is used at those addresses, but they are not using them too much. - Those people are not speculating on anything, which creates some “organic bedrock” of 3,4B DAI sitting on EOAs. - This situation may change in the future, but even when we experienced a crush recently and in January, this proportion has not changed significantly. - If we look at the usage of the capital given by those DAI as a non-stablecoin exposure, we have 3B below this already mentioned bedrock of “organic” DAI. That represents a 400 million buffer to continue deploying DAI, which means that, in the worst scenario —all lending stops, all the DEXs are draining, all the bridges emptied— we still have a 400 million buffer to continue deploying DAI with a different project. - We should also clean the 235M DAI stuck in USDC-A, USDP-A, and GUSD-A. Those vaults were made before the PSM and are no longer used because every client is now underwater. We have to move those from the vaults to the PSM. Either way, they are counted as stablecoin liquidity in the slide. - We need to think about what we should do if the situation worsens. - We could consider stablecoin liquidity going into “crisis mode” if we go under the 1,5B DAI in the PSM. - **The first step**, in this case, could be to increase the target rate for Aave D3M (100-300M DAI savings) to remove the DAI exposure on Aave. But all this is half effective since not all DAI that we put on Aave are borrowed, and those that are not borrowed; if we take them back, this will not move the price. - **Second step**, we can increase the SF on DAI/USDC LP, but as our stability fees are very low, it’s not strategic. We have 450M under the vault, but even if we remove all this exposure, the impact on the PSM will be half of that. In those vaults, we have USDC/DAI as collateral, which has very high leverage, and that means that if we unwind everything, it will remove half on the asset side and another half on the DAI side. If we do this, the net effect on the PSM will be an increase of 200M. - **Third step**: increase the DSR to be at the same rate. That way, if you give a good rate on DAI, people might be incentivized, but this is something that cannot be done in the short term. The yield should be quite interesting. And all this is costly. - **Fourth step**: increase all vault’s SF. This will affect competitiveness and customers relationship. #### Nadia Álvarez [55:25](https://youtu.be/jK2VtNUHuGE?t=3328) - **When or what should happen to know that we need to act fast in a situation where liquidity is dropping on DAI?** #### Sebastien Derivaux [55:39](https://youtu.be/jK2VtNUHuGE?t=3339) - It's very difficult to say. It's better to have solutions already in place. We can't waste one month of discussion before acting if things get complicated. We need to be able to move fast. - We put a placeholder of 1.5B in PSM. That's when we need to start to rush. #### Rune Christensen [56:24](https://youtu.be/jK2VtNUHuGE?t=3384) - **Assuming we use a theoretical structure similar to Monetalis, how many stablecoins do we need to hold on-chain that we simply could not put into bonds? How high do you think we could set a baseline DAI savings rate?** #### Sebastien Derivaux [57:49](https://youtu.be/jK2VtNUHuGE?t=3469) - We’ve been working on that. If everything is frictionless, the main issue is that we should keep the less possible in PSM. - The problem is more about implementation, as there are costs involved in brokerage, and so far, it is not clear what those costs could be in the end, but there will be some friction. - We would have to keep a good buffer in the PSM. We don’t have definitive numbers. It will depend mainly on our fees when we want to go out of the shortened bonds. #### LongForWisdom [59:17](https://youtu.be/jK2VtNUHuGE?t=3557) - I think we have the mechanisms to resolve long-term issues, but the problem with the PSM is that we need some short-term media mechanisms. It may be wise to set up something that increases the DSR along some curve as the PSM liquidity drains from our maximum desired percentage to 0%. - You should get a clear signal: your PSM will drop, and the DSR will increase. - My point is: that maybe our solution should be to start using our long-term fix earlier in this situation. #### Sebastien Derivaux [01:00:40](https://youtu.be/jK2VtNUHuGE?t=3640) - **Are you saying that we should have a smart contract that is permissionless that checks if the PSM is below a certain threshold to increase the DSR automatically?** - I think that we should get there at some point because Governance is a bit too slow. There must be a more effective way to solve this problem. - The DSR was tried in 2020, but now it's quite different. The market is quite different too, so who knows what would happen if we increase DSR by 2%? - If you order some kind of assets that can be used as a repo on Aave, you can also source some equities there. If there is a need for liquidity, you can use ETH, put them on Aave, and borrow DAI or USDC to meet the demand. - There are plenty of things we can do. We need to implement them and move slowly and carefully. #### Rune Christensen [01:02:08](https://youtu.be/jK2VtNUHuGE?t=3728) - If we do this, the DSR comes from the surplus buffer, so the surplus buffer has to be replenished by SFs. Can we imagine some bonded curve as the PSM empty for the DSR, and then the Risk group or Governance sets SFs to pay for the DSR increase? Is that the idea? #### LongForWisdom [01:02:33](https://youtu.be/jK2VtNUHuGE?t=3753) - Yes. Use the DSR to deal with the issue in the short term, and then you can either choose to increase the SF or not, depending on how the general income revenue situation looks. #### Sebastien Derivaux [01:02:52](https://youtu.be/jK2VtNUHuGE?t=3772) - We might need to increase the DSR above our actual revenues, so we are making a loss. But that’s just a temporary solution until we fix the problem by rising SF or something else. #### Primoz Kordez [01:03:33](https://youtu.be/jK2VtNUHuGE?t=3813) - In the last slide, you didn’t mention that we still have several stablecoin vaults that can be liquidated into their respective PSMs, which will help shore up a little bit of the PSMs. It’s a temporary solution if we get close to empty, but it’s a trigger we can pull. - We hold about 4B of stablecoins: 3B in PSMs, half a billion in G units, the abandoned stablecoin vaults, and then there’s this USDT issue that is getting resolved, so the BSM increased by 100M in the last hour. This will increase the DAI holdings curve, and the PSM will increase. #### Sebastien Derivaux [01:04:55](https://youtu.be/jK2VtNUHuGE?t=3895) - Yes, but the curve is sometimes very slow to go into balance as the amplification factor is insane and difficult to predict. #### Kirk [01:05:36](https://youtu.be/jK2VtNUHuGE?t=3936) - Many other stablecoins deal with low peg issues with incentivization on curve pools, and that's another tool in the toolbox. - I worry about the DSR and SF raises; those are slow mechanisms. There may be a structural reason we can’t raise them high enough to achieve the effects we want, or they may come with harmful demand destruction side effects. #### Sebastien Derivaux [01:06:22](https://youtu.be/jK2VtNUHuGE?t=3982) - One of the key points of [this slide](https://i.imgur.com/zSIpP8P.jpg) is the purple part of DAI on the bottom left, which is what I call _organic_ DAI. - If you can make people hold DAI and use it for their daily payments and stays in circulation, that’s the best tool we have because that’s sticky, but liquidity farming solutions are not. #### Rune Christensen [01:07:06](https://youtu.be/jK2VtNUHuGE?t=4026) - **The purple on your graphs tells us many EOAs are using DAI as a flight to safety during market turbulences?** #### Sebastien Derivaux [01:07:16](https://youtu.be/jK2VtNUHuGE?t=4036) - Yes, but the increase of last week is not that big. I don’t know exactly what they are using it for. This would be a good subject to know. #### Rune Christensen [01:07:42](https://youtu.be/jK2VtNUHuGE?t=4062) - A comment about the idea that we can count on that purple EOA demand as being reasonably static: I think that’s probably not true when we start to see the depths of the bear market. - I guess most of the people in purple are going to dump it for volatile assets they think they can make gains on, which will put much downward pressure on the peg. That’s another event to look out for. #### Nadia Álvarez [01:08:46](https://youtu.be/jK2VtNUHuGE?t=4126) - USDC and USDT are sticky because they have liquidity, and it’s very easy and cheap to convert them to fiat. Let’s remember that we need to work on increasing the liquidity to get that stickiness. - The next step to achieve is the multi-change strategy. Once we start working with L2 and side-chains, we can work closer to other ecosystems and increase integrations with other projects. ## Open Discussion ![](https://i.imgur.com/McJ9MBd.jpg) #### Nadia Álvarez [01:13:12](https://youtu.be/jK2VtNUHuGE?t=4392) - I have been receiving many comments from partners and people everywhere, who are happy for us and amazed at how the market is crashing, but Maker is yielding. #### Rune Christensen [01:14:48](https://youtu.be/jK2VtNUHuGE?t=4488) - I’ve been doing these meetings to overhaul the Governance for the long term. Given the recent events, in particular, I think now is the time actually to begin implementation. - Tuesday at 5 p.m. I’m doing the first of these calls. They are called Voter Committees, where many MKR holders get together and discuss what’s there in their interest to vote for. - Today, voting decisions mainly occur in close meetings between Delegates and CUs, between CUs and VCs, or sometimes between collateral applicants and VCs or Delegates. - All the decision-making process is happening in essentially closed meetings, causing things to backslide. - We must create way more clarity about this decision-making process, align votes, measure voting power, and even consider opposing voting power. - My impression is that MKR holders that aren’t being paid in any way feel sort of frustrated and disenfranchised right now to a large extent. CUs members are getting paid, and everyone is involved and incentivized, but MKR holders are volunteers and have a minimal stake. - Right now, it’s tough to know the pure opinion of MKR holders. I want to create a “safe space” for MKR holders where we can simply discuss what is in their interest. #### Kianga [01:18:21](https://youtu.be/jK2VtNUHuGE?t=4701) - I’d love more color on the closed meetings, and I’ve heard this impression from other parts of the community. There’s this perception of the real decisions happening behind closed doors, and more transparency it’s necessary; let everyone know. - In the Strategic Initiative kick-off, we talked about how difficult it is for Delegates to know the views of MKR holders and vice-versa. - I want to say that I vote with my conscience, and I’m not caucusing anyone to give me input on what I should vote for. I hope that any MKR holder can get to know my views, and I look forward to being as transparent about that as possible. - My view on being a Delegate is to offer service to the DAO and its wider stakeholders. #### Rune Christensen [01:20:49](https://youtu.be/jK2VtNUHuGE?t=4849) - There’s much stuff happening all over the CUs. A kind of entity has almost formed. The structure has emerged: a bureaucracy formed by amalgamating the CUs, the Delegates, and even certain collateral counterparties. - This is built mainly upon relationships between people. As a natural evolution, you have these meetings where things are decided. The reality is that everyone’s been doing this to get anything done. - The decentralized process of Maker is so incredibly complex and has this issue of complexity spiraling. - I don’t think that there’s a trust issue. It’s a natural process that could not have been avoided at all. - I get exposed to a lot of the behind-the-scenes stuff that’s happening, and I can say that there’s much bad stuff: politics and conflict and inefficiency and that kind of stuff that naturally occurs in any organization explodes in a DAO. - We should look forward to this and not blame or worry about what organically emerged. Ultimately, it has to be some kind of major initiative to build things properly from the ground. - It can’t be retroactively expected that the CUs should have figured out how to deal with this. - I’m worried that the reaction to this could be something like, “okay, let’s find out some scandal or something”: we need to think about what we can constructively do from here. #### Nadia Álvarez [01:24:20](https://youtu.be/jK2VtNUHuGE?t=5060) - Of course, we have meetings with other CUs where the community or Delegates don’t participate. Still, it’s just because sometimes we have to discuss sensitive information with other CUs before proposing something to MakerDAO. - It’s difficult to have these conversations with sensitive information transparently because sometimes, we are forced to sign an NDA to have these conversations with counterparties. - If we want to do something, we need to work in private, and then —when we have the deal almost closed— we go and present it to the community because we have to wait until Government decides if that’s what they want to do or not. - e, as CUs, respect Maker Governance, and we know that Maker holders decide what we should do or not, but you have to understand that sometimes we can’t discuss everything. #### Rune Christensen [01:27:03](https://youtu.be/jK2VtNUHuGE?t=5223) - I just saw this comment from Sam earlier asking about the Voter Committee. - You can think of it as a meta-structure that is not a part of Maker's formal government structure because, essentially, it’s a private call with MKR holders showing up. - The purpose of the call is to align on voting behavior and whom to delegate to. - The whole point is that the decision-making process has to become transparent. You need to understand the decisions made, why they were made, and how to verify them. - Many of these issues we need to tackle are about scalability and sustainability, not about someone with some major conflict of interest. - These calls need to have MKR holders talking and deciding if we want some external input from someone in the workforce; who and what we want to hear. - Ultimately, we recognize a principal-agent relationship between MKR holders and the various professional actors in the ecosystem. - I also have this whole large-scale proposal that I’m developing and trying to propose that would have a bunch of next steps that go further to try to go down this path of trying to fix Governance and then make it work for the long run. ## Conclusion #### Payton Rose [01:31:03](https://youtu.be/jK2VtNUHuGE?t=5463) - We can have open G&R calls, and MKR holders can hop on, but, realistically, it’ll be a few of them vs. many protocol people who spend all of our time working on this. It’s quite an intimidating environment. - Likewise, it’s very easy for CUs to coordinate with one another and have these meetings to talk about strategy and vision and all these other things. In contrast, the same open framework doesn’t exist for MKR holders. - From a government standpoint, I see this is trying to address that fundamental problem of organization. [Suggestion Box](https://app.suggestionox.com/r/GovCallQs) ## Common Abbreviated Terms `CR`: Collateralization Ratio `DC`: Debt Ceiling `EOA`: Externally Owned Account `ES`: Emergency Shutdown `SF`: Stability Fee `DSR`: Dai Savings Rate `MIP`: Maker Improvement Proposal `OSM`: Oracle Security Module `LR`: Liquidation Ratio `PSM`: Peg Stability Module `RWA`: Real-World Asset `RWF`: Real-World Finance `SC`: Smart Contracts `Liq`: Liquidations `CU`: Core Unit ## Credits - Larry produced this summary. - Andrea produced this summary. - Iván produced this summary. - Everyone who spoke and presented on the call.