---
# System prepended metadata

title: 'Episode 166: November 4th, 2021'
tags: [G&R]

---

---
tags: G&R
---

# Episode 166: November 4th, 2021

## Agenda

- [00:11](https://youtu.be/ASoEefJcG2k?t=11): Introduction
- [01:36](https://youtu.be/ASoEefJcG2k): Votes and Polls
- [03:19](https://youtu.be/ASoEefJcG2k?t=199): MIPs Update
- [05:54](https://youtu.be/ASoEefJcG2k?t=354): Forum at a Glance
- [12:20](https://youtu.be/ASoEefJcG2k?t=740): Discussion - Luca Prosperi
- [38:20](https://youtu.be/ASoEefJcG2k?t=2300): D3M Overview 
- [1:00:05](https://youtu.be/ASoEefJcG2k?t=3605): Open Discussion 
- [00:00](): Conclusion

## Video

<https://www.youtube.com/watch?v=r3q6YH__FOA>

## Introduction 

### Agenda and Preamble

#### LongforWisdom

[00:11](https://youtu.be/ASoEefJcG2k?t=11)

- Welcome everyone to the MakerDAO Scientific Governance and Risk Meeting episode #166. My name is LongforWisdom, one of the governance facilitators at MakerDAO. We encourage all engagement, questions, and comments, but as a reminder, this call is recorded, so please try not to talk over one another. Please note that daylight savings time was last Sunday for our European friends and next Sunday in the United States. Please be aware that this meeting is scheduled in UTC.

## General Updates

### Polls

#### LongforWisdom

*Polls:*
- 3 Weekly Polls - PASSED
    - Clean Money Sentiment 
    - OMC Parameter Proposal 
    - Lower all PSM fees to 0%
- 2 Greenlight Polls
    - MDI (MD Irrandiance LLC)
    - OHM (Olympus DAO)
- 3 Greenlight Polls Completed
    - Community Greenlight Poll - OFH (Security Tokens Refinancing)
    - Comununity Greenlight Poll - TMZ-DROP (Technology Metals Market)
    - Community Greenlight Poll - CSC (Curio Stablecoin)

*Executive:*

- Last Week's executive - PASSED & EXECUTED 
    - Aave D3M Onboarding 
    - Core Unit Budget Transfers
- Executive proposal up for vote tomorrow. Will include:
    - OMC Parameter Change Proposal
    - Lower PSM Vault Fees 
    - Core Units Budget Transfer for DUX 

### MIPs

#### Pablo

[Weekly MIPs Update #53](https://forum.makerdao.com/t/weekly-mips-update-53/10310)

![](https://i.imgur.com/2t1Fihr.png)

![](https://i.imgur.com/tPPrTnB.jpg)

![](https://i.imgur.com/CjHoCgu.jpg)

![](https://i.imgur.com/8aqD9IN.jpg)

![](https://i.imgur.com/K73TC7w.jpg)

![](https://i.imgur.com/25xjb8u.jpg)

![](https://i.imgur.com/aw4mAxQ.jpg)


### Forum at a Glance

#### Artem Gordon

Post: [Forum at a Glance: September 10th - 16th](https://forum.makerdao.com/t/forum-at-a-glance-september-10th-16th/10344)

Video: [Forum at a Glance](https://www.youtube.com/watch?v=AXqR0Kr8WCg&t=108s)

## Team-Led Discussions

### Luca Prosperi

#### Real World Sandbox

![](https://i.imgur.com/aNENpLT.jpg)

![](https://i.imgur.com/CsJOiuj.jpg)

![](https://i.imgur.com/vJf9cqy.jpg)

![](https://i.imgur.com/mjyrukB.jpg)

- Maker should become a super senior lender. We should aim to deal with the highest quality counterparties and underwrite credit-focused not on high and attractive yields but rather having a stable, sustainable, and scalable risk-adjusted yield. Instead, we do not need to make 10% but focus on making a solid 1% to scale and expand the DAI footprint.

![](https://i.imgur.com/FDeKBWq.jpg)

![](https://i.imgur.com/UVV5Nn3.jpg)

![](https://i.imgur.com/dXqBVEi.jpg)

- We want to make this as collaborative as possible.  After we release our report, we most likely open a consultation phase to onboard all comments from the community. Hopefully, if there is an agreement in the forums, we may move forth with implementation. 

[22:16](https://youtu.be/ASoEefJcG2k?t=1336)

- SebVentures: I have two questions. Firstly, who are we? You only mentioned yourself in the slide, although it could be interesting to see what aspect you bring to the table. Secondly, you said you want to make a patient only with the highest quality of counterparties. All the counterparties proposed by a young startup with less than two years of research track record. How do you reconcile those items?

[22:55](https://youtu.be/ASoEefJcG2k?t=1375)

- Luca Prosperi: When I talk about us, I mean two things. Firstly, I have been leading this project myself. I am the author and the primary signature on this project, but this is an SCS back project. Everything I have we have discussed so far has been shared with SCS. Unless one thinks differently, our work also represents the view, in some way, of ACS. I have direct expertise, so my input is the primary input here. I have been discussing with other community parties that have been involved in real-world financing in some shape or form. However, these have been collaborations, sources of information, and views but not authorship. Most people are interested and agree with how we can improve and scale the process, but the content is my responsibility in my view alone.
- How do we reconcile? This project and Rune’s view on the arranger model are independent. I started this project, and I had not spoken to Rune ever. He was so kind to reach out in the last weeks because he knew what we were working on. He wanted to get our point of view and share what he thought could be the future of Maker. We were financing that. However, I have not been involved in drafting his post, and he has not been involved in drafting the report that we will publish. There are similarities, but there are also differences. One of the key differences and things we need to reconcile is the quality of the counterparties. The counterparties will have to go through an extensive and accurate process of onboarding. They will have some key compliance requirements needed to interact with Maker. Those requirements would depend on the nature of the credit we do and the nature of the credit mitigating factors in place. 
- This process will have to be as rigorous as possible. We have not shared those criteria. We also have not started onboarding those counterparties. It is very early to tell, but we need to be as conservative as possible in dealing with the counterparties. In practice, those counterparties will have to have regulatory stamping, prove a solid track record, and work with the most reputable borrowers on the backend. They will also need to provide best-in-class credit, credit structuring, and credit risk-mitigating factors. How this will translate into reality is still yet to be seen.

[26:19](https://youtu.be/ASoEefJcG2k?t=1579)

- Juan: I want to add to what was happening in the chat; the SES provides the grant. We do believe that is one of the possible ways to 100x Maker. This initiative aligns with our mission and vision of scaling the ecosystem.

[26:54](https://youtu.be/ASoEefJcG2k?t=1614)

- Prose11: I have one in terms of positioning Makers as the supercenter lender. Given our cost of capital, this does make sense. I am curious about your thoughts on attracting counterparties. It seems like if I were an institution looking for lending, it would be much safer going to a bank with the current low rates. What are your thoughts on that?

[27:20](https://youtu.be/ASoEefJcG2k?t=1640)

- Luca Prosperi: I have been involved in providing liquidity to alternative lenders for ten years. I started as a hedge fund manager. We were providing liquidity by buying credit from originating lenders in the United States. Our cost of capital was 8-10%. This is what we wanted to make out of the credit net of losses. When I started, I changed my job from an investor to a productivity investor. When we owned a bank in ACB, I was on the board as a board observer. We were purchasing credit from alternative lenders as a bank. The yield cost of liquidity is meager today but not zero for banks. We were underwriting senior credit originated by platforms of the highest quality at 4-5%. This was our breakeven yield. 5% levered as a bank become becomes 20-25%. Banks have difficulty in providing this type of lending at cheaper rates. You can achieve cheaper rates if you have struck a securitization. This realization is very liquid. Then, you can access senior lenders at 50 basis points, 1%. Maker is still extremely competitive even against the most senior lenders. It is just another pool of capital. I believe they could finance their senior covered bond and negative rates. They are still going for Maker because it allows them access to another pool of capital. And then suddenly that 0%, the very cheap cost of Maker capital, becomes very attractive for other types of solid but higher-yielding assets. Maker has the space to be an attractive pool of capital for high-quality institutional lenders.

[29:37](https://youtu.be/ASoEefJcG2k?t=1777)

- Jason Jones: Thanks for the question. Payton. I have actively brought in several real-world assets to Maker today. What we are seeing now is raising the bar. The new originators brought to Maker will be in a whole different class than what we have experimented with in the past year. I certainly see that in the market. The quality level of those that will be seeking capital is significantly higher compared to the past. We are talking banks, large asset originators, and triple-league quality borrowers. So, very high quality. For Luca and Will, the question is, how will this new SCS sandbox work with the real world as a working group or finance? Officially the finance core unit. When we are navigating and bringing collateral to Maker, we just need to clarify whom we talked to and how we get it through the process. And hopefully, that will be resolved relatively soon.

[30:53](https://youtu.be/ASoEefJcG2k?t=1853)

- Luca Prosperi: I can speak on my concerns and let the real-world core units speak for theirs. As a specialist and Maker community member, I am just writing a report on how I see our scaling method. This report is simply the product of my views and has no official backing whatsoever by the community. We are still working on the process of how I think the process can be improved and turbocharged. This process is not a substitution to what the real world finance core unit has been doing, but merely an addition. Having clarity on what type of things we want to do has immense power to the outside world, signaling what we are ready to embark on and what we are not prepared to waste our time on. The structuring part will be healthy by having separation of origination and risk management capabilities and distributing the responsibilities outside of the community for the heavy lifting. I will need to detail my view with the other project stakeholders in the second phase of our project. The report will be ready in the next two or three weeks. What comes next will depend on what the community decides to do. The current facilities for the date precipitator, our financing team members, can give you a better answer today. I am just providing my view as an expert that has been on a grant by SCS.

[33:01](https://youtu.be/ASoEefJcG2k?t=1981)

- Juan: This grant's idea is to research how to scale this up. One way could be working together. Another way could be creating work prioritization. Another could be different powers checking one another, such as sourcing, checking the risk, etc. This is not my field of expertise, so I do not want to go too deep.

[33:55](https://youtu.be/ASoEefJcG2k?t=2035)

- SebVentures: Currently, the clarity is not super high. Everything is in place as the team is working as they did last week, continuing to onboard.
- There are no changes yet except for association tasks above us. It's difficult to work with a DAO when directions are changing every day. 

[34:48](https://youtu.be/ASoEefJcG2k?t=2088)

- Kirk: I want to add a general comment that has nothing to do with real-world finance but more about the structure of the DAO. Since everything is transparent and open, we need to learn to deal with the mass communication buzzing around early-stage projects that are not yet the official policy of the DAO. When someone like Wouter comes to the forum with just a proposal, crypto media outlets will portray this as what MakerDAO is now doing. We should be careful in clarifying the proposals' statuses, the official DAO consensus, and voter-approved versus discussion ideas. Of course, the ideas about the future are often more exciting than the process of detailed voting and approval for implementation. These ideas naturally will be discussed more as a speculation rather than the boring details of implementation. This is something we will need to learn how to deal with as a decentralized and open organization. I do not think it is just in real finance that we'll see this kind of confusion. 

[36:56](https://youtu.be/ASoEefJcG2k?t=2216)

- LongforWisdom: It is about time to move on. Thank you for a very interesting presentation. Any last comments, Luca?

[37:35](https://youtu.be/ASoEefJcG2k?t=2255)

- Luca Prosperi: Please feel to reach out to me on the forum or Discord, very happy to chat. Thank you.

### D3M Overview

[38:32](https://youtu.be/ASoEefJcG2k?t=2312)

- Sam MacPherson: As everybody is aware, D3M was launched on Tuesday. As expected, the debt ceiling was maxed out immediately because the borrowing rate on Aave is currently quite high. There is a lot of demand to borrow stable coins. So far, so good. This will be a quick overview of D3M. There is a MIP video I did with Stanley back around May. I recommend you watch that for a detailed explanation of the workings and involved risks. I have a meme taken from my Tweet thread that explains it better well. I can go over the example. There may be an NFT for that JPEG now.
- Today, Primoz put up a post to raise the D3M to 50 million and lower the target interest rate to 3.9%. Currently, it is sitting at 4%. The borrower interest rate on Aave is entirely based on pool utilization. The utilization is the amount borrowed from the market divided by the total market size. The total market size is the amount borrowed plus the available DAI that is available to borrow. 80% is sort of the sweet spot for Aave, where the interest rate will move up slowly from zero to 80%. It takes a sharp point and will go up to 79% borrow rate when it reaches 100% utilization. Historically, we have seen that Aave for the Dai market hovers around this point, called the kink. The kink is at market equilibrium.

[42:14](https://youtu.be/ASoEefJcG2k?t=2534)

- Sam MacPherson: This graphic illustrates well how the D3M works. The top bar represents an example market. The total market size is 90 million, and 80 million has been borrowed in this market, leaving 10 million available in actual Dai. If you calculate 80, divided by 90 million, you get utilization of 89%. This is higher than the 80%, the sweet spot. The variable borrow rate shoots up to 37%. This rate is super high and not desirable but often happens in bull markets. This is not good for the users. The D3M will respond by minting some Dai to return utilization to 80%. It calculates that it can make 10 million Dai and put that into the pool of available Dai. Now the calculation is 80 million total borrow divided by 100 million, which is 80%. The variable borrow rate is at our desired rate of 4%.
- Now, let us say some random user repays their loan of 5 million. This payment comes out of the borrowed amount and is Dai paid back by this user. This Dai is now available in the pool, ready to be borrowed or withdrawn. The total market size is still the same at 100 million, but the utilization has dropped to 75%. This results in a variable borrow rate of 3.75%, which is under what we are targeting. So again, the D3M will automatically calculate a 6.25 million withdrawal because that will give the target utilization/borrow rate of 80% and 4%, respectively.
-  This process happens as frequently as you want. Ignoring the debt ceiling will cap the total amount admitted into the pool, keeping the utilization at 80% no matter what. However, utilization may change if it is less than the original deposited amount. Let us say the interest rate drops low, and the D3M has not minted much. If it reaches zero, it cannot withdraw more than it is entitled to. This module gives our users excellent UX when they borrow against Dai, helping us compete with USDC users who leverage Aave. If they do this calculus, they may get the maximum borrow rate of 4% on Dai. Then, why would they use USDC, which effectively has no upper bound? This is a big win. Any questions or additional comments?

[45:31](https://youtu.be/ASoEefJcG2k?t=2731)

- Primoz Kordez: Do you want to talk about risks?
    - David Utrobin: Does this mechanism provide a fixed rate no matter what?
    - Sam MacPherson: Yes, if the D3M is within the amount range and the debt ceiling, it would provide a fixed rate. However, it can drop below 4%. In addition, if the D3M runs out of Dai it has previously minted, it will not be able to pull out Dai that it does not own.  The same applies to the upper end with the debt ceiling. The debt ceiling is currently maxed. This does not affect much because the debt ceiling is 10 million, and the market size is 2 billion. The interest rate on Aave, the last time I checked, was at 8%.

[46:43](https://youtu.be/ASoEefJcG2k?t=2436)

- Wouter: Are we still waiting for any audits or additional checks before raising the debt ceiling?
    - Sam MacPherson: We have received a draft of the audit; it looks good. We will wait for the final report. Also, we want a bit of time for Lindy effects. We will do this gradually; 50 million is an excellent next step. We want to wait a bit before we turn it up.
    - Wouter: Absolutely. Thanks to the low debt ceiling, we can bring this to the market quicker. Hopefully, this is something we can continue doing in the future.

[47:27](https://youtu.be/ASoEefJcG2k?t=2847)

- David Utrobin: I saw in the governance chat this morning some concern about Aave’s overall solvency. I am curious about the risks for D3M modules. Is there a cap for our loss aside from the debt ceiling? How would it behave if a protocol were to go under a version of urgency shut down?
    - Nik: The risk report goes into detail about it this. It is essentially about capping the debt ceiling at a set utilization ratio. Like Sam said about the kink, when there is a steady increase of the rate on Aave hits the kink, the rate goes parabolic. Due to the kink position, there is a certain utilization amount always available to withdraw. We want D3M within or maxed at that utilization rate. This suggests that we should have an extra buffer on there as well. It comes down to how much risk Maker governance wants to take. You can get stuck in Aave due to the utilization. If you go too high on the upside with this debt ceiling relative to the kink position, you can probably extract more yield. The DAO can make more profit, but up takes more risk. Anytime you are locked in, you hold this debt and hope that Aave will not go insolvent.
    - David Utrobin: That makes sense, thank you. I must read more in-depth about this topic.

[49:43](https://youtu.be/ASoEefJcG2k?t=2983)

- Primoz Kordez: One of our risks is the liquidity risk. There are also a few other risks. In the liquidity risks that Nick mentioned, the maximum limit on the debt ceiling would be 20%, putting us at a 400 million debt ceiling. We would probably want more buffer. In the long run, assuming the market stays as it is, we would not suggest going over 300 million. But before we do that, there are a lot of other considerations I already wrote about a bit today. We need to address this possible increase from 50 million to prepare the community. There is the liquidity risk that we described. In addition, we have credit risk, which is how Dai is being borrowed. This is the same Dai that D3M supplies. When Dai is being borrowed, how well is collateralized, and by which assets? The credit risk is currently low because most of Dai borrowed is from so-called recursive leveraged farmers. People are essentially supplying Dai and then borrowing it. 85% of the 1.5 billion of Dai borrowed, around 1.2 billion, comprises the Dai supply and reborrowing. The Dai that is so-called risky is the other parts we borrow, roughly the 250 million. However, it is not as risky because ETH and Bitcoin mostly collateralize it.
- Credit risk is currently fairly low. However, credit risk can suddenly change because AAVE does not have a concept of a debt ceiling. If there is bad collateral and Oracle is manipulated similarly to the recent attack on CREAM, the collateral may be stolen on the platform. This may be probably the biggest issue I have with risk mitigation. I believe they just announced the other V3 about an hour ago. V3 should be an upgrade from V2, and they are going to implement the debt ceilings. This should be an improvement for us. Otherwise, we will need constantly need to monitor, although we do this anyway. Monitoring is important as bad collateral can create a big hole in the system. In the same way, we do a collateral risk assessment at Maker; we should do the same at Aave because we are indirectly facing the same risks.
- In addition to credit risk, there are also other risks, such as Oracle risk. The community needs to discuss its exposure level the sudden introduction of different Oracle types because they are currently using Chainlink. The fourth risk, a big technical risk, is that this module does not know when something is wrong at Aave and starts behaving incorrectly. Imagine a scenario where there is an exploit at Aave, and people start pulling money out. In response, the Dai supply would start draining and spiking up rates. Our module would, instead of pulling money out, would start minting more Dai in. When the rates go up, the Module starts will lower the utilization by design, behaving totally in the wrong way.
- We have two risk mitigants. In one mitigant, we are using the eastern Texas module debt ceiling that lowers the increase of depth ceiling. This protects us before we can shut down the module, which is the second safety procedure we can take. The safety module even has a cooldown period. Sam may know more about this. This is the biggest risk of getting high debt ceilings, plus the inability of Aave to have those ceiling constraints which they will repair.

[54:40](https://youtu.be/ASoEefJcG2k?t=3280)

- Sam MacPherson: We do have instant access for shutting the module down. Brands can bypass the governance delay to shut down the module in an emergency. I do not know if people are aware, but we get reward steaks from Dai being deposited. So currently, those will just flow back to the pause proxy. This is an interesting transition where we are presently holding another protocol's governance token in ours. However, I do not know what we can do with this.

[55:31](https://youtu.be/ASoEefJcG2k?t=3331)

- PaperImperium: How high do we want to go with the direct deposit module? If it gets too big, it will compete with the PSM in monetary policy because it targets a rate. This competition is fine in small amounts. However, the PSM is perhaps better suited to address our peg. We do not want to risk interfering with that. I am not sure at what point this would be an issue in targeting a rate. If we get the rate wrong, then we may potentially unwind the PSM too quickly. If the PSM is empty, we would not have as many good tools as we do currently. When talking about hundreds of millions, we might need to consider taking more active management of debt ceilings from a monetary risk perspective. Although we cannot target both rates and the peg simultaneously, they may come into conflict at some point.
    - SebVentures: That is a good idea, in addition to trying to hard code the PSM, so there is only a certain percentage of its switches. However, I am unsure of how significant that percentage would be. This is just my top-of-the-mind suggestion.

[57:41](https://youtu.be/ASoEefJcG2k?t=3461)

- Prose11: How feasible is it to take what we're doing with Aave and point it towards a compound?
    - Sam MacPherson: I have not looked at the compound extensively, but it should be roughly the same. There may be a similar kink in their interest rates. We can do it as it is not a lot of work.

[58:09](https://youtu.be/ASoEefJcG2k?t=3489)

- Primoz Kordez: I had an idea the other day concerning our issues with long-tail tokens unprofitable to Maker due to the Oracle fees. There is a way for us to create a market that works like the Arvand compound. I am unsure when this new protocol was introduced, which is a Uniswap for lending markets. Anybody can create their pool of tokens with their compound or with a set of rules. While I am unsure how to do this through Governance, Maker could select the tokens with various parameters that would fit our risk criteria, set up this pool, then do the DTM implementation. This does not cut the Oracle fees for us, and there may be many risks, but it is a nice and scalable way to cover other tokens that you would not want to hide in the core Maker protocol.

### Team Led Discussion 

[59:51](https://youtu.be/ASoEefJcG2k?t=3591)

 - LongForWisdom: These modules hold a lot of potentials. Are there any other questions or comments on D3M? I believe Nadia and Burban wanted to discuss when to meet, liquidity, and market-making list. Perhaps we can come to that.

[01:00:24](https://youtu.be/ASoEefJcG2k?t=3624)

 - Andrew Burban: People are not a fan of the Wintermute deal due to various reasons. When the deal was first proposed, their strike price was $5,000. The strike price understandably pushed a lot of people off. We also never communicated to them the end of the deal. We got to close away with three deals. They are not too concerned with the strike price but instead want to partner badly with us. If this is a blocker, we can negotiate the strike price, whatever it may be. I spoke with them on the phone just recently. Some people want to see the metrics or a monthly report. I am sure they will work with us on the targets that they want. In general, we have a thin market for Maker. Scaling in or outsize would take the course of a few weeks to months. If people remember, this was the case for Poly chain with A16Z back then. Everyone has their reasons for coming in and out of Maker. They should be able to do this rather seamlessly. If they want to market sell, that should not wholly nuke the market. On the flip side, it is nice to have huge green dildos.
 - Immediately retracing that, the price action is unhealthy within markets. It does not look good on the chart. It is not attractive to anyone who wants to invest. Some people said we could market Maker on Uniswap. That may be possible, but that is not necessarily what we are good at. There is a permanent loss, and it is a lot to manage. Wintermute is excellent at this. They currently want to market Maker so badly that they are shorting Aave to grab Maker from various places with liquidity. They are still going to market Maker but through inefficient means. The amount in question right now is 10,000 Maker. The last time I spoke to them, they wanted a $20,000 strike but are open to a $10,000 strike. In the worst-case scenario, we will sell them 10,000 Maker at $10,000 or $20,000. That would not be a huge tragedy. However, the other good thing is that they are market neutral. We are giving a liquidity provider an incentive to move Maker's price up to a higher strike in the near term. This is not the worst thing in the world. I think it would be good to take the deal.
 - The unsecured loan has a severe reputation to defend. I am not worried that they would default on this. If they do, it would be bad to lose 10,000 Maker. However, I do not think they will. This is a risk worth taking for a necessary service they provide. In addition, we need liquid markets in the event of a solvency crisis that forces us to mint lots of Maker. Maker sold in thin books is devasting as it will nuke its price. If we have liquid books, we can sell Maker. It will still dump the price, but it will be healthier for us. I hope we can close this deal. The deal would be good for us. They are nice people and want to work with us.

[01:05:43](https://youtu.be/ASoEefJcG2k?t=3943)

 - Nadia Alvarez: The community needs to understand why we need Dai liquidity and a Maker liquidity increase. We all agree that Dai liquidity is required. However, low liquidity on Arbitrum, Polygon, or others worries me with the new change strategy. When new projects consider integrating Dai, or even Maker, they are not thinking in Dai. That is a problem. The XE and the running network launched today did not include Dai. This is terrible because we have a long-term partnership with them. It is a liquidity problem right now.
- Furthermore, is a protocol problem with MKR due to what we just mentioned. Simply having individuals manage MKR liquid is a very high risk. You may read all the reasons that I wrote in the forum. The next step is to close all the details for disagreements, such as the call option and the metrics. We were expecting that post in the forum to gain community feedback on what we should include in this deal. This deal is an uncollateralized loan of MKR, but it is based on reputation. It is something similar to, but not the same, as the Nexus institutional agreement made by using smart contracts and an executive vote. They are trusting in us, and we are trusting in them. Instead of creating a foundation with uncollateralized loans, we can start exploring how Wintermute’s guys are doing with their DAOs. It will not be a problem for them to provide a DeFi and DAO service with us. That is something worth exploring. This will be the first time we have done something like this because we never gave up MKR loans. The next step will be to talk with governance and maybe SES in structuring these MIPs to help Wintermute provide a service to the DAO. I am not sure if this will be a core unit, but we need to guide them on structuring these services.

[01:09:35](https://youtu.be/ASoEefJcG2k?t=4175)

 - Andrew Burban: Peyton says we can maybe get the revenue out of the deal. I do not know how these things typically work, but it is a service, and we should be happy not to pay for it.
    - Nadia Alvarez: When you are a neutral market Maker, you provide the other side of the market. Of course, they will get MKR, but they will also be adding USDC, ETH, USD, Euros, or the other side of the pair. So, no does not make sense to ask for revenue.

[01:10:16](https://youtu.be/ASoEefJcG2k?t=4216)

 - Nik: We need liquidity not just on decentralized exchanges but also on centralized exchanges. The DAO could put some in Uniswap V2 or V3.  However, just because you have some on-chain liquidity, that does not mean all the basses do are covered. Look at something like a spell or magical internet money. A lot of their collateral portfolio relies on curve liquidity for the meme token. Despite some ridiculous amount of liquidity on the curve, they still went and partnered with Alameda to get market Maker liquidity on centralized exchanges. This is a two-pronged problem. Putting some liquidity in the decks will not solve these problems.

[01:11:16](https://youtu.be/ASoEefJcG2k?t=4276)

 - Nadia Alvarez: I welcome the community to post your comments on the forum. If you have any questions, send me a DM on Discord. We are open to like any of your ideas of how we can improve this agreement. We need this service. We need market Makers to help us not just with Dai but with Maker. Dai is super urgent for us right now. Due to the new side chains and layer two, we have a problem with the distribution of Dai liquidity on those chains. I do not have a solution for that while seeing the problems. Wintermute may be a solution, but I encourage others to speak on this issue.

[1:12:23](https://youtu.be/ASoEefJcG2k?t=4343)

- SebVentures: Things are quite pushy on the Centrifuge deals because the contractual obligation is weak on risk. And so they want to start to clear them, more or less. On this one, there will be no contract at all, which seems fine. Trust is good if it's a defect by a person, but not if it's an RWA that has existed for 60 years. I think there is a bit of schizophrenia within the community on the topic. I mean, you can't get both at the same time.

[1:13:12](https://youtu.be/ASoEefJcG2k?t=4392)

- David Utrobin: All right, just so I understand what just happened. So we moved off the topic of Wintermute. We're talking about real-world finance. Now. You mentioned I just didn't. I'm not sure I was hearing you understand what you were saying. Can you clarify?

[1:13:26](https://youtu.be/ASoEefJcG2k?t=4406)

- SebVentures: Yeah, I'm just combining Wintermute, which is where we will learn the $30 million to, let's say, Peoples Company or NewSilver, where we are lending 10,000,000 as security. The community pushed back on the last two because there is a contractual obligation. However, people are accepting Wintermute's reputation. 

[1:13:56](https://youtu.be/ASoEefJcG2k?t=4436)

- David Utrobin: I get what you're saying. I but I think that the argument is that Wintermute has a way more embedded and large-like reputation compared to centrifuge. Like I think that's like the main reason why we're we're trusting their reputation.

[1:14:31](https://youtu.be/ASoEefJcG2k?t=4471)

- LongForWisdom: All right, so we're reaching the end of our time together today. Thank you, everyone, for joining us today. I look forward to seeing you all next week thanks, guys

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## 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

- Artem Gordon produced this summary.
- David Utrobin who helps keep GovComms alive.
- Larry Wu produced this summary.
- Everyone who spoke and presented on the call, listed in the headers.​
