---
# System prepended metadata

title: 'Episode 143: May 27, 2021'
tags: [G&R]

---

---
tags: G&R
---

# Episode 143: May 27, 2021

## Agenda

- [00:00](https://youtu.be/hesWs-wBQgM): Introduction
- [01:12](https://youtu.be/jM5Fm74WL44?t=72): Governance Update
- [04:19](https://youtu.be/jM5Fm74WL44?t=259): GovAlpha Core Unit update
- [04:53](https://youtu.be/jM5Fm74WL44?t=293): Forum at a Glance
- [07:30](https://youtu.be/jM5Fm74WL44?t=453): Protocol Engineering Team Update
- [13:05](https://youtu.be/jM5Fm74WL44?t=795): Oracles Team Update
- [19:39](https://youtu.be/jM5Fm74WL44?t=1179): Risk Team Update
- [25:34](https://youtu.be/jM5Fm74WL44?t=1534): Real World Finance Update
- [28:55](https://youtu.be/jM5Fm74WL44?t=1735): 6S Update
- [46:22](https://youtu.be/jM5Fm74WL44?t=2782): Growth Core Unit Update
- [56:22](https://youtu.be/jM5Fm74WL44?t=3382): Content Production Update
- [1:00:10](https://youtu.be/jM5Fm74WL44?t=3610): Operational Support Team Update
- [1:05:00](https://youtu.be/jM5Fm74WL44?t=3900): Sustainable Ecosystem Scaling Update
- [1:06:15](https://youtu.be/jM5Fm74WL44?t=3975): MIPs Update
- [1:13:51](https://youtu.be/jM5Fm74WL44?t=1183): Dai and PSM Overview
- [1:33:10](https://youtu.be/jM5Fm74WL44?t=5590): Burning Foundation MKR

## Video

<https://youtu.be/jM5Fm74WL44>

## Introduction

### Agenda and Preamble

#### LongForWisdom

[00:00](https://youtu.be/hesWs-wBQgM)

- Hello everyone, and welcome to the MakerDAO Scientific Governance and Risk meeting number 143 taking place on Thursday, May 27th at 17:00 UTC. My name is LongForWisdom. I'm the Governance Facilitator at MakerDAO.
- If you want to ask questions or have comments, please do speak up. Everyone here enjoys answering questions.

## Weekly Updates

### Governance

#### LongForWisdom

[01:12](https://youtu.be/jM5Fm74WL44?t=72)

- Last week has been uneventful in Governance. We had some trouble passing the [week before last's executive](https://vote.makerdao.com/executive/609ebe2817a042001ae0b056?network=mainnet#proposal-detail) to the point that we ended up entirely skipping last Friday's executive due to time constraints. It was not ideal. We did manage to put up the [monthly MIPs executive on Monday, which passed](https://vote.makerdao.com/executive/approve-may-2021-governance-cycle?network=mainnet#proposal-detail). So we should be all set from here on out. As usual, we have an [executive this Friday](https://vote.makerdao.com/executive/urgent-changes-oracle-whitelisting-liquidations-2-0-activations?network=mainnet#proposal-detail), which will include information from last Friday along with some other stuff. 
- On the bright side, the executive we struggled with has finally passed. It brought some minor stability changes, DC changes and replaced the units LP token oracles with the audited versions, which is great. I am now fixing up a few minor issues.
- The monthly MIPs executive for May brings us to the Sustainable Ecosystem Scaling Core Unit. Congratulations to Juan, Wouter, and all involved. You are now officially onboarded. We also approved [MIP51](https://mips.makerdao.com/mips/details/MIP51) with some changes to the monthly governance cycle. David has been talking about this in the MIPs updates for the last few weeks, and he will cover it again today. We will make sure everyone knows what is going on in June for the monthly cycle. Next, we passed some minor amendments to [MIP0](https://mips.makerdao.com/mips/details/MIP4c2SP14), making it more straightforward, shorter, and more easily accessible. Finally, we passed [MIP50](https://mips.makerdao.com/mips/details/MIP50), the Direct Deposit Module presented by Sam and Stanley from Aave.

### Polls and Executive

- We also had one poll last week to [whitelist the protocol on the WBTC-USD oracle](https://vote.makerdao.com/polling/QmSUny5o?network=mainnet#poll-detail), which passed. We will see that in an executive soon, either this week or next week. 
- This week's executive at the release should include moving the Uniswap LPs to Liq 2.0, which is what we skipped last week. It will also include two urgent changes that we pulled on earlier this week based on the increased amount of USDC-USD collateral in the Maker Protocol combined with the market dips. Those proposed changes will be to [increase the PSM USDC-A ceiling from two billion to three billion](https://forum.makerdao.com/t/urgent-adjustments-to-tip-psm-usdc-a-dc/8274). The other urgent change makes sure we have enough space to keep the peg on $1.00 and [setting the `tip` to 300 Dai on all types of Liq](https://forum.makerdao.com/t/urgent-adjustments-to-tip-psm-usdc-a-dc/8274). We want to make sure Liq 2.0 runs super smoothly, even on smaller Vaults. 

### GovAlpha Core Unit update

[04:19](https://youtu.be/jM5Fm74WL44?t=259)

- For details, you can see the [forum post](https://forum.makerdao.com/t/govalpha-weekly-update-2021-05-27/8387) I created.
- There is nothing critical or game-changing that has happened within the last week. We can check that link to have a general update on some of the things we are working on.

### Forum at a Glance

#### Payton Rose

[04:53](https://youtu.be/jM5Fm74WL44?t=293)

[Forum at a Glance - Forum Thread](https://forum.makerdao.com/t/forum-at-a-glance-may-21-27/8379)

#### Three-Point Summary

- A volatile week in crypto put [some pressure on the peg](https://dai.stablecoin.science/), but things have settled back to $1.003 at the time of drafting.
- Our new Monthly Governance Cycle has been approved! Check out [MIP51](https://mips.makerdao.com/mips/details/MIP51) for details.
- DAI Supply is back to increasing: 4.6B and counting. 

![](https://i.imgur.com/ofU87O2.png)

#### Announcements

- There will be a [couple items on this week’s Executive Vote](https://forum.makerdao.com/t/urgent-adjustments-to-tip-psm-usdc-a-dc/8274/11) at the recommendation of @Risk-Core-Unit, adding a tip value and increasing the USDC PSM to a 3B Debt Ceiling.
- Congratulations to our newest Core Unit: [Sustainable Ecosystem Scaling](https://forum.makerdao.com/t/mip39c2-sp10-adding-sustainable-ecosystem-scaling-core-unit/7368) :tada:
- Don’t miss the [upcoming AMA with William Remor](https://forum.makerdao.com/t/ama-william-remor-of-the-real-world-finance-core-unit/8203) 1 of Real-World Finance fame. Join Will next week, June 3 at 21:00 UTC on Zoom 1.

#### Discussions

- [[Statistics] Estimated Yearly Revenue By Vault Class](https://forum.makerdao.com/t/statistics-estimated-yearly-revenue-by-vault-class/8229) 
    - @PaperImperium shares some findings on vault revenue and usage across the various vault types.
- [Press Releases at MakerDAO](https://forum.makerdao.com/t/discussion-press-releases-at-makerdao/8323) 
    - @Davidutro aims the topic of press releases for MakerDAO. Share your thoughts on how this important communication function can function in a DAO-space.
- [[Monetary Theory] Maker’s Unusual Superpowers](https://forum.makerdao.com/t/monetary-theory-makers-unusual-superpowers/8301) 
    - @PaperImperium going hard to the paint this week, with this thread exploring the potential uses of Maker’s unique ability to print DAI.

#### Signal Requests

- [Burn the 84k Foundation MKR](https://forum.makerdao.com/t/signal-request-burn-the-84k-foundation-mkr/8338) 
    - @Aaron_Bartsch asks the community if they would like to burn the 84k MKR sitting in the Pause Proxy following a break from discussion on the topic.
- [Should we add new PSMs?](https://forum.makerdao.com/t/signal-request-should-we-add-new-psms/8337) 
    - @Aaron_Bartsch gives several options for adding new PSMs in this signal. Leave your thoughts (and votes!) on options for USDT, BUSD, PAX, TUSD, and GUSD.
- [New vault-type for YFI with a higher LR](https://forum.makerdao.com/t/signal-request-new-vault-type-for-yfi-with-a-higher-lr/8199) 
    - One week left on @ultraschuppi 's signal for an ETH-C-like vault for the folks over at Yearn (YFI).
- [Adjusting Dust Parameter (2021-3)](https://forum.makerdao.com/t/signal-request-adjusting-dust-parameter-2021-3/8315) 
    - @Monet-Supply is back with a poll for adjusting the minimum debt (dust) parameter on vaults, with options separate options for ETH-B, ETH-C, and the remaining vault types.
- [Protocol Treasury Meme](https://forum.makerdao.com/t/signal-request-protocol-treasury-meme/8339) 
    - @Spidomo brings a competing signal for burning/minting of MKR in the Pause Proxy based on the meme factor.

### Protocol Engineering Team Update

#### Christopher Mooney

[07:30](https://youtu.be/jM5Fm74WL44?t=453)

[Protocol Engineering Monthly Review](https://forum.makerdao.com/t/protocol-engineering-month-in-review-may-2021/8471)

- We had an executive last week for the LP tokens, which have liquidations on are in the spell, and LP tokens that don't have liquidations who are part of the stablecoin class have their spells ready to be deployed. However, few changes came up because of last weekend. In addition, there was an urgent request and polling for the PSM USDC-A DC increase to incentivize people to participate in liquidation. We will add these two configuration changes into the spell and redeploy them, which may be going out on Friday.
- For next Friday, we have stablecoins planned for that executive. I was talking to Primoz on this but was not sure how the liquidation curve would look. It is heavily dependent on what we do with PSM, so there's an urgent requirement on whether or not we're going to sweep things into the PSM. Luckily, this mostly involves cleaning up only the technical debt. 
- On the collateral onboarding side, we've got [xSUSHI evaluation](https://forum.makerdao.com/tag/slp) out, and we're also evaluating four potential Centrifuge assets. I got [one of them up in the forums](https://forum.makerdao.com/t/rwa003-cf4drp-cf-drop-mip22-token-protocol-engineering-domain-team-assessment/8382) today. The others are similar technical assessments, and they should be forthcoming shortly. There's a SushiJoin adapter which we want to deploy the week after the stablecoin executive; the audits are complete there, and now we're working on integration tests and making sure that works. 
- Apart from that, there are lots of discussions going on L2/multichain strategies. There's work on the Optimism DAI Bridge. We are getting that ready for audits, including higher-level discussion for potential scaling strategies.
    - LongForWisdom: Any estimated dates for the L2 Optimism DAI Bridge?
    - Kris Kaczor: I don't know if this information is public or not, but it should be in the latest blog post of Optimism. It will be in July. one more thing that we're working on is the Arbitrum Bridge, which is a similar process and will launch tomorrow.

### Oracles Team Update

#### Nik Kunkel

[13:05](https://youtu.be/jM5Fm74WL44?t=795)

- We want to get the remainder of the LP tokens, namely stable coin variants, on liquidations 2.0. We were a little bit fortunate last week because the LP token vault owners were quite active in unwinding their vaults on their own rather than letting them go to liquidations. We have never seen that kind of volume go through Liq 1.0. I would feel confident about these liquidations once they happen through 2.0. They can be immediately unwrapped and then dump on DEX before anyone needs to have the capital to purchase them. 
    - Chris: To add, during these pullbacks, these LP tokens end up taking a ton of income from fee. They make all kinds of additional fee from people panicking and swapping through those pools, and that should, in theory, bump the oracle price which may even make them more resilient than we had originally anticipated against the liquidation so that might be our happy accident. 
- On the core unit, we are figuring out more on the strategy side. I think we've talked a lot about RWAs. However, once you get into more details, then it's very important to figure out a generalized framework on valuing this stuff, How to partner with neutral parties that everyone trusts in the real world, and how to convince and price these services are few things that we're trying to figure out. 
- The other thing that I am looking closely at is L2's such as Arbitrum, which will be launching next week. Optimism launching soon, and for Starkware, there's a generalized mainnet coming on that's not isolated for each app on its roll-up. We need to know which protocol and application are choosing what because I feel that L2s a big opportunity for oracles due to gas costs being more lenient relative to costs on L1. This allows us to step up our competitive game. We have been prepared for this; Our oracle infrastructure is blockchain agnostic. We have discussed Scuttlebutt and Lib P2P, which are on Ethereum based infrastructure pieces of the oracle setup. Everything can be the same, including contracts that can be deployed as they are now, except that we need to point relayers to Optimism or Arbitrium clients instead of the current Ethereum remote procedure call clients. We are well-positioned to deploy these within a week on the L2 chains. We can seize this opportunity. 

### Risk Team Update

#### Primoz Kordez

[19:39](https://youtu.be/jM5Fm74WL44?t=1179)

- We made some [parameter proposals](https://forum.makerdao.com/t/signal-request-adjusting-dust-parameter-2021-3/8315) this week, posted by Monet-supply asking for a higher `dust` limit. Please, vote. The [other proposals](https://forum.makerdao.com/t/urgent-adjustments-to-tip-psm-usdc-a-dc/8274) made by myself introduce flat-fee reward for barking auctions of 300 Dai. The second proposal is to increase the DC for PSM USDC. If we were to have another downturn in MKR price, we may hit the PSM DC, which could escalate into something more critical. This isn't the only Risk related. 
- The three billion DC vote passed, which means we should increase DC and bark incentive and flat fee implemented within the next executive vote tomorrow. 
- We are also finalizing stablecoin vault Liq 2.0 parameters. Chris mentioned that we want to see the outcome poll about the PSM to understand what auction curves price makes the most sense for vaults that won't be migrated into the PSM. There is a significant difference in the floor prices set in the auction. This may take some time before we know the best recommendation. 
- Mark published the Sushi LP evaluations. We're proceeding with evaluations of another three during this week, likely to be YFI-ETH, LINK-ETH, and DAI-ETH. SUSHI-ETH is also a potential candidate afterward. Because Sushi would be a new asset, we can also cover xSushi during the same time. 
- Finally, next week, the Parameter Proposal Group will hold a monthly meeting to discuss some DC. The team will focus on refreshing risk premiums and recommended maximum DCs, which could be much more important this time around. We may reduce the rates due to the increase in USDC exposure. We may also increase the DC on ETH-B. I recommend tweaking some of the auction parameters for ETH-B. It could be better to have a shorter duration for vaults containing lower liquidation ratios such as ETH-B. 
    - Christopher Mooney: Do we still think that a `dust` increase is still necessary since Liq 2.0 is less gas-intensive? 
    - Primoz: [Monet made calculations](https://docs.google.com/spreadsheets/d/1TDtcJVUFHwhnKjBoa4rX1-qo8KJVsyk8jokM_oG4wYI/edit#gid=0) that show we may still end up spending a lot on gas. It depends on what gas prices we want to protect ourselves and our users due to unwinding costs. 
    - LongForWisdom: Can we increase `tip` or parameter sets that would fall to keep `dust` low without exceeding the penalty percentage?
    - Primoz: If we increase `dust` penalty fees, we could increase the `tip.` 300 `tip` may be a good value depending on gas prices. 

### Real-World Finance Team Update

#### Sébastien Derivaux

[25:34](https://youtu.be/jM5Fm74WL44?t=1534)

- The Centrifuge batch will be delayed until June 18th due to the slipping of the previous executive. 
- We had published the [People's Company risk assessment](https://forum.makerdao.com/t/p1-drop-mip6-risk-assessment-alternative-equity-advisors-drop-us-agricultural-real-estate/8232) last week. The Smart Contracts Team will start publishing the smart contract assessment as well. I expect that poll to be on-chain next week for onboarding. 
- We have significantly worked on the Trust model. There was not much discussion on the [6S preliminary contract assessment](https://forum.makerdao.com/t/sixs-rwa-001-6s-preliminary-contracts-assessment/8233/2), but everyone must look at it. We are making small changes to this model for other implementations like SolarX, Reinno, and all the further development that will use the Trust model. I published something like that in Real-World Finance section on the [forum](https://forum.makerdao.com/t/trust-model-work-in-progress/8351).
- We are in the process of engaging with a Cayman's specialized law firm who will help us understand the laws in the Cayman Islands.
- We are running a little bit late with our legal advisor, but we are still in the process. First, we need to pass some KYC. It is always tricky for those companies to work with the DAO when the customer is not a customer but is instead another party of the DAO.
- I published some research on [designing stablecoin liquidity](https://forum.makerdao.com/t/research-paper-stablecoin-design-liquidity/8352). There was much discussion regarding the PSM; Should we diversify? Should we have big exposure to the PSM or not? This research can be useful for some. 
- Lastly, we are thinking a lot about the strategy for RWA. On the one hand, we no longer want any small RWA - below 50 million - by the end of the year, because it is too much work for not enough reward. On the other hand, we want to be more aligned with what we want to achieve and not just depend on what is coming to others. Maybe make some specific investments that can help the balance sheet of MakerDAO and not waiting for people to show up and limiting us to those people.

### 6S Update

#### Matthew Rabinowitz

[28:55](https://youtu.be/jM5Fm74WL44?t=1735)

- The entire process for 6S Capital started in July last year in the middle of the global pandemic. As a result, all the banks pulled back on credit. Fast-forward to today. Banks are starting to provide credit again.
- We started by presenting a term sheet to the community, which Governance then approved, and the real work started. Getting information, entity formations, engaging with trustees, accountants, attorneys, etc. There is so much that has been learned in this process that sharing and disseminating that knowledge is essential for the DAO. 
- Here is the executive summary. I continue to believe that the Trust structure is the way to scale. Delaware Statutory Trusts are the way to go with a regulated trustee: a bankruptcy-remote entity by statute does matter. The Trust structure being advanced is shielded by statute from having assets attached due to a downstream bankruptcy. There is a reason why the Delaware legislature implemented this. There is a reason why trillions on mortgage-backed securities, CMBS, and other structured products use Delaware as their preferred jurisdiction. The Delaware Statutory Trust is at the center of all of it. There is wisdom here for us to learn, and there is a reason we need to deep dive and lean into it. I can assure you that this jurisdiction was not selected by accident. The ability to know that legal standing can be defended or the case dismissed is essential. Without you, insert uncertainty and delays to what possibly could be bankruptcy. 
- Trust sponsors can only be neutered so far before that because they are given certain powers by laws of the jurisdiction of their formation. As long as we are engaging with humans, it would help if you still had human discretion. For example, reasonable business judgment waivers for a mechanic slane that is 100 dollars on dirt from a downstream borrower. That should not blow up an entire revolver. However, technically it is a breach of a negative covenant. Waiting on a DAO to vote for that is simply unworkable. The game theory around this is important, but humans make judgment calls at the end of the day. If the DAO intends to remove the human element completely, we massively curtail the possible credit space for Maker. When it comes to lending against physical collateral, like real estate, Maker must know whom it is doing business with and have reasonable confidence in that party. There is no legal structure that can remove all risk from any lending transaction; no blockchain can do that until the day blockchain loans secured by physical assets can be enforced in a court of law directly. Even then, I am not sure we all want to live in that world. 
- Based on the Community feedback, an updated version of some of the Trust documents and credit agreements will be provided in a form that provides further control for the DAO. Following on, everyone will want high DC. There is no doubt there will be a list of people coming up who do not yet. Over the past ten months, I have spent hours working with the Community on secured lending, and many still do not understand this law. Until the Community has that understanding, it should not extend large amounts of credit to anybody. Some have the perception that this is a technological challenge. It is not. It is a legal enforceability challenge. Getting your money back is the name of the game. For example, Maker is accustomed to near-instant Liq to collateral. However, no State permits any lender, private or not, to instantly foreclose on the collateral. Borrowers have rights as notice and the ability to cure. Some states will not permit a foreclosure for 30 days. Suppose Maker wants to accept physical collateral into the Protocol and liquidate that collateral. In that case, it can only enforce such rights through a legal process. That is meant so that both sides have a fair hearing. We have to decide if we want to be a margin line or a credit facility, i.e., revolver for the real world. We must crawl, then walk, then run, and many of us want to fly. As I have discussed with more hours than I can count with some influential and respected Community members, the trade-offs here are quite simple. It is liquidation capability to protect the Dai ecosystem and tools that incentivize refinancing, which depends largely on if there was a default by the parties downstream. In the real world, typically, lenders cannot force borrowers to repay early if the borrower is not in default. A lender that tried would be in breach of its loan agreement, and that also punishes a good lender that did nothing wrong. 
- At the end of the day, we also have to make sure that what we are constructing is useful and competitive. What does that leave us? This is, frankly, your question. At present, we are in a holding pattern pending Dai to be added to the underlying broker-dealer. We expect that to be another couple of weeks to the New York financial services. However, after many calls and constructive comments with recommended changes to the language of the credit agreement and the trust agreement, changes are being implemented. This is hopefully going to constrain the Trust sponsor further where possible and also fixing some clerical errors. You will see some posts on the forum with red lines shortly. That said, regardless of the Community approves 6S or not, I am compelled as an MKR token holder personally to advise the Community to understand the role of a Trust sponsor fully and not bring on collateral to a protocol without diligence into the underlying LendCo and the Trust sponsor, in this case, Crestbridge, a regulated entity under the law on the Cayman islands for the 6S structure. We have a full understanding of how Maker enforces its rights in the event of a default by the borrower. Like how an LLC is either manager or member-managed, a Trust is either a beneficiary or managed by a Trust sponsor. Since the ownership of MKR is unknown and ever-changing, doing KYC on MKR is virtually impossible, at least it is today. Therefore, a Trust sponsor must manage the Trust by bringing on a Trustee, even if it is a directed Trust. 
- Further, I am compelled to stress the significance of the Community learning the nuances of secured versus unsecured structures. Recourse and enforceability matter; legal opinions matter. We all want collateral on the Protocol, however knowing regulated parties have custody and control over the cash or the Liens at all times is essential, again: crawl, walk, run. 
- Going back to the comments that I received from feedback that I got from the Community, some comments can be best summarized down to "I don't like it." These comments are not helpful, nor do they benefit the community as a whole. We, the DAO, the Community, must learn the nuance of how to properly manage this before we put our foot to the floor. For sure, borrowers are lining up, and every part of me says, "tap the brakes," we have to learn to crawl first. I want to fly a jet, but the ecosystem is not ready for it. I am exceptionally happy to see companies, like RWA companies, stepping up for the DAO. Once the broker-dealer has been approved, we will be able to weld everything shut for the 6S structure and go to closing. We are rapidly approaching the window where all documents on Version 1 will be deemed final. Then, closing with the trustee will occur. I am spending a significant amount of time, capital in pursuing what hopefully will be shared by more than just me. I am hopeful for your vote. We have brought together world-class service providers, and every party along the way is regulated except for Maker itself. One day, even with a perfected structure, from an equity standpoint, there is a political angle that we can not deny. What we say matters; keeping our word matters. This will only be more pointed in the future. We are raising equity for structures that require the DAO to maintain confidence and legitimacy. When I reference equity, I am talking about the equity investors, who are putting the real capital at risk, including my own money, for this LendCo. There is no smart contract development that can happen that will replace legitimacy. We do that; there is no code for that. We must balance the humanity that we expect from downstream parties just the same. Specifically, one area has come up that is worth bringing up. There is no perception of failure to disclose. That is required related to the interest rate changes and the rate of interest rate changes increase. Today the transaction structure is prime plus the spread. The DAO controls that spread. I will be working with the Community to advance an index representing something more than what the Community can control, DSR plus a spread. Today we have a structure where that spread has some element of a throttle over a quarterly period. You will see those in the red lines that will be coming out shortly. As for now, the DSR plus the spread is the idea, but for now, the real world has no idea what DSR is and cannot recognize it as an interest rate index like prime LIBOR fed funds. It is an area we are working on. The broader issue is the term to which the Community can withstand to have Dai outside of its liquidation control. Today it is measured in hours, the RWA lenders are pushing for days and weeks, and 6S is pushing for a few years. As the ecosystem matures, so will the sensitivity to capital being out of the Protocol for longer. Are we ready for everyone to continually have renewing revolvers? I do not think we are yet. I have beat my head against the wall, against my counsel, against well-intended, very well-respected Community members, so much that it just hurts. This is a complicated structure, but one that is decades old in the real world. Trillions of dollars are extended and repaid annually using secured lending structures just like it. I hope the Community can see that. Which makes comments like the "I don't like it" ones all the more pungent and sour as it disregards and discounts the countless hours and hundreds of thousands of dollars that have been committed thus far with an unknown outcome. I very much want to get the Community's input, as these last weeks coming up are the point where I embrace the most risk and the venture into the unknown. Doing this in a decentralized way, a vacuum, with an absent counterparty is not for the faint of heart. More than ever, what is clear to me is that the power and capability that Maker wields is way more than most realize. We all want progress. Everyone is well-intended. Maker has a wonderful future ahead of it. Defaults will happen, and folks will stumble and fall; that is not interesting; it is a guaranteed outcome for some. What is interesting is what happens when we pick ourselves up as a community. While collateral will survive and thrive, who will still be standing? In addition to other Community members that reach out to me personally, we will find out a special shoutout to Gregory Di Prisco at RWA company for his countless hours thus far. Providing constructive feedback and recommending language changes to the documents has helped the DAO in incalculable ways. He has done so respectfully and in a principled and sometimes painfully firm way. I found this collaboration and engagement invigorating. We are very lucky to have him in the Maker Community. 

#### Questions

- Sébastien Derivaux: Can you share the timelines you are envisioning going forward? What I understand is that some people do not like RWA at all. It is not constructive at all, so it is not super important but going forward, as you want to amend, the timeline. Also, I understand that some people prefer to go privately. However, I think some construction should happen in the public forum as I am not sure it is the best way to do everything on a peer-to-peer basis. It is not for you; it is for the community members as well. 
    - Matthew Rabinowitz: Regarding the time, as I mentioned, we have received feedback, we are processing that now, and I expect to be posting red lines hopefully by the end of the weekend, if not the beginning of next week. Probably give the Community another week or two weeks to digest all of them and then close. Presently, the broker-dealer and the department of financial services in New York are still constrained by the critical path.
- Wouter: Since there seem to be some constraints simply in the complexities and the nuances and everything that the community needs to learn, because if we are going to operate a real bank, then there is a profession to be learned, is there anything that can be done to help unblock and increase the speed at which the information is decimated, and people start understanding the important points that need to be understood?
    - Matthew Rabinowitz: Short answer is that being a senior secure lender is an art, not precisely a science, and we have to start small and slow, and it is frustrating because everyone wants it to go faster. I would treat every one of the Dai that would be minted as if it were my own. As I am a fiduciary over the equity, I always have to do what is in their best interest. That part being said, there is no good way to skip to how we can take this to billions without learning how to crawl. There is a process we all will be intimate in this have to go through, and there is no shortcut. There is a shortcut, which is doing it too fast; doing it with losses and losses is a very painful way to learn. 
    - Wouter: The question was specifically about helping to educate rather than speed up the process itself, but that would amount to speeding it up further down the line, I would think.
    - Matthew Rabinowitz: The best way to do it is to continue to have weekly calls with folks that want to ask questions. In the week before this, I had set up multiple windows for folks to dial into ask-me-anything sessions, and we had very little participation. There is a challenge between "we all want it to work" and "somebody else is going to do it." The only way to learn this is by participating. 
    - David Utrobin: Do you think it would be a worthy investment to hire more professionals that are intimately aware of these structures and have had previous experiences, like setting up the Delaware Trust structure, etc., or do you firmly believe that this is a crawling thing. There should only be one or two or three cooks in the kitchen?
    - Matthew Rabinowitz: I do not proclaim to have a shortage of LendCos. We may need to have more of them; it should not be only me; that is not my objective as far as hiring professionals with the DAO, sure that that can hurt. Regarding the world-class team we pulled together, at least on my end, I do not proclaim to know the enforceability of these contracts; that is why we are having enforceability done. For stability opinion done by basically the best firm that does and has a premier Trust section in Delaware representing Wilmington Trust Company and Wilmington Savings Fund Society, these are the folks that issue legal opinions for multi-billion-dollar mortgage-backed securities. They know the law. As far as getting other people involved, I am 100% for it.
    - Sébastien Derivaux: To add, we will spend more than 10.000 Dai just to review the Cayman part, and I am still waiting for a quote for the rest. 

### Growth Core Unit Update

#### Nadia Alvarez

[46:22](https://youtu.be/jM5Fm74WL44?t=2782)

[Growth CU Weekly Updates](https://forum.makerdao.com/t/growth-cu-weekly-update-may-21-27/8385)

- This week was super interesting. We are starting to have deeper conversations with the Polygon team to see what else we can do together. Bartek from the engineering team joined oracle, and he talked to them, so we would see if we could do something else together. We are also talking with the team to see what we can do for our partners interested in integrating Dai on Polygon to help them so that they can offer this layer to solution to their users. We are also starting to talk with Solana to prepare everything for a Dai and Solana launching in a month or so. This is great because we are talking with other projects that are on top of Solana so that they can have these Dai on Solana as well. That is regarding other networks and L2s. 
- We saw the [post by Derek](https://forum.makerdao.com/t/a-multichain-strategy-and-roadmap-for-maker/8380) in the forum. It will be awesome to all participants on what to do if we want to see Maker growing in other networks and L2s. We all know that it is important; we all know that Dai has to be everywhere, but also, and thank you to other Core Units that are cautious and taking care of all Dai users. The Smart Contract team's research is super important for us because they are giving us a lot of feedback and input so we can understand what is happening in all these other networks. We know there is much adoption, but we also have to be careful about what could happen in the future.
- Furthermore, we are having conversations with these important users of the Maker Protocol because we want to know what they think about Maker Vaults and improve the way they are using our Vaults. We want to mint more Dai, and we know that these institutional Vaults - custom Vaults - are important so that Maker can get bigger. We had a conversation with NEXXO. We will be having another one with Celsius, Savvy, Fireworks, and companies like that. As soon as we have more information and everything is digested, I will post something in the forum to tell you all about this and the feedback we are getting from them.
- The star of the week was India. We see much adoption of crypto, although they are struggling with all the regulators. However, that has been the trigger to start all this interest around crypto. We are working closely with ZebPay and EPNS, and we are trying to create a product so that people in India could be more attracted to use Dai on those platforms. We see much potential in this country because there are about 340 startups doing something related to crypto, so it is a great opportunity for us. All of this was led by Jocelyn Chang, who is in charge of the Asia growth strategy.

#### Questions
 
- Frank Cruz: I am not sure if you can disclose this but, are there any conversations with more TradeFi companies? I am seeing many headlines about the "normal" people like PayPal, Venmo, and maybe some of them that I have never heard of from South America or Asia. Are you having any conversations like that?
    - Nadia Alvarez: We reached out to companies like the ones that you mentioned. Usually, they look for more regulated stablecoins like USDC. We are also talking with Paxos, trying to figure out what can be done in that sense. That is why we wanted to understand these Institutional Vaults. We want to understand what companies like Nexxo, who have huge Vaults in ETH and Bitcoin with us, need. We need first to have a product that these institutions would use, and then we can go and look for these institutions to use that product. Because, for now, the way we decide the risk parameters is not because we are thinking about these huge institutions that are going to put their crypto treasuries in the Vaults. However, we are more thinking about how the market is. After these conversations with Nexxo and others, I expect that we can better understand what they are looking for. Then we have a more customized product for institutions. Of course, we also have restrictions because these institutions are looking for something more regulated. Dai is centralized, so it is not necessarily what they are looking for. We are trying to figure out if a third party could provide services to them using the Maker Protocol in the back.
    - Frank Cruz: That is good stuff. Are there any wallet providers that can help Dai grow in areas like Mexico or Central America that you can name that maybe we have never heard of? I am trying to figure out if people in Latin America are using things I have never heard of. 
    - Nadia Alvarez: Yes! I posted in the forum how Dai is used in Latin America. You can find different wallets. Wallets that are, for example, exclusively for Dai. But we are having a big problem with gas fees. We are trying to solve different things in parallel. We have to help our partners integrate their solutions and integrate Dai on an L2. We are also trying to figure out how to have this product that could serve the needs that Institutional Companies could have if they decided to open a Vault with us. We are also trying to find a third party who could help us as the frontend with the institutions if they need something more regulated. We are trying to figure out how to manage everything. I promise you that I will try to post something about different wallets that integrated Dai and all the efforts they are making to integrate Dai on Polygon, for example, to provide a solution to these users using Dai daily. We are waiting for Optimism because we want to do something with our partners to help them integrate this Dai and reach more retail users. ​

### Content Production Update

#### Seth Goldfarb

[56:22](https://youtu.be/jM5Fm74WL44?t=3382)

[Content Production Biweekly Updates](https://forum.makerdao.com/t/content-production-bi-weekly-update-may-13-may-26-2021/8386/4)

- We have been working with Amy and Anna on getting ownership of the Community portal, and we have got a plan to get the site transferred over to a new domain in a way that preserves the SEO. So we are working on getting everything moved over there. That is awesome because it means that we will have a hub for all of our educational content. It has a strong SETO, and the CMS has been designed to make it easy to integrate contributions from the Community. I have already reached out to a handful of people about how the content will be reorganized there, but if anyone has any concerns about the way different parts of the Protocol are presented on the portal currently, please reach out. We can talk about what we can do to improve that. 
- The Foundation is still doing a legal review of properties like Twitter, Telegram and Linkedin, and even analyticsmakerdao.com. We are still communicating with them about getting those properties transferred over to the Community.
- In the meantime, we have a couple of events coming up. We have an AMA series that we are going to be doing. The first one is on [June 3rd with William Remor from Real-World Finance](https://www.reddit.com/r/MakerDAO/comments/nh3sjy/ama_with_william_r_of_makerdaos_real_world/). If you have any questions about that, we will love to see you there. If you cannot make it, we will be posting recordings on video, audio, and transcript afterward. Matthew Rabinowitz, I was not aware of your AMA. However, I will reach out afterward and see if we can put that on the calendar and do something to help make it a little more prominent. 
- We will also be doing a series called "What the world is doing with Dai?". This is a replacement for the Community call that David Utrobin used to host. The purpose is to spotlight integrations and all the cool ways that people are using Dai. The first one will be with CurioInvest. They have made it possible to invest in tokenized collectible cars using Dai. We will have more information about that in the forum soon. 
- We have hired a part-time designer who is going to be helping us out. If anyone has any design-related needs, please reach out, and we will see what we can do. Thanks to Bourbon for helping us find her. We are very excited to be working with her. 
- We are also starting to look for a Community Manager, a  blog editor, and someone to handle video production. If anyone has candidates that might be good for that, please send them our way.
- We have a post in the forum about [a mascot for MakerDAO](https://forum.makerdao.com/t/informal-poll-does-makerdao-want-a-mascot/8083). Some conversations about this started a few weeks ago, and there has been much input. Now the capibara and the dragon are looking close. Please vote for that.

### Operational Support Update

#### Amy Jung

[1:00:10](https://youtu.be/jM5Fm74WL44?t=3610)

[Operational Support Final Weekly Update](https://forum.makerdao.com/t/operational-support-final-weekly-update-may-20-27-2021/8388)

- A few announcements:
    - Operational support is officially dissolving by the end of this month. First, we provided support to Core Units, but now the projects have been handed off. So I will be [officially offboarding as a fascilitator](https://forum.makerdao.com/t/mip41c5-sp1-facilitator-offboarding-amy-jung/8383), and [onboarding Juan in my replacement for SES](https://vote.makerdao.com/executive/approve-may-2021-governance-cycle?network=mainnet#proposal-detail). 
    - The calls will continue. This [forum link](https://forum.makerdao.com/t/collateral-calls-calling-all-projects/3715) provides details on projects if you want to present. The next Pod Session is with Nick on June 2nd. I recommend looking at the resources and discussions for Core Units at the bottom of the forum post.
    - Part of the foundation dissolution, community development will be sunsetting as of May 31st. I began as a contributor in Com Dev over two years ago. I now think of Community Development as a door for people to get more involved with MakerDAO. There will be more formal communications in the future. I am proud of the team and our accomplishments. When I took this role, I told role, I couldn't have imagined that we would now have an entirely decentralized community involving up to nine facilitators.
    - Next week will be my final week at Maker. The experience I had here was the most unique and fascinating experience of my life, which gave me so much insight into the future of technology and organization. It is unfortunate for me to leave at such a prosperous time at Maker. However, I am confident that MakerDAO will continue to have exponential growth. I am leaving with a full heart of love and confidence.
- Everyone: So sad. Please don't leave us, Amy. 

### Sustainable Ecosystem Scaling

#### Juan Guillén

[1:05:00](https://youtu.be/jM5Fm74WL44?t=3900)

- I wanted to thank everyone in the name of the whole team. We were celebrating online earlier today, and we are very excited to start next week. We were very happy to join everyone officially, and hopefully, we can start providing value as soon as possible. 
- Regarding Amy, it is sad that she decided not to continue with us. We will all miss her and miss her presence. But, unfortunately, she said no amount of Dai or MKR could make her stay and then smashed the door on her way out, so we have to live with that. 

### MIPs Update

#### David Utrobin

[1:06:15](https://youtu.be/jM5Fm74WL44?t=3975)

[Weekly MIPs Updates](https://forum.makerdao.com/t/mips-update-36/8125)

![](https://i.imgur.com/yVo4xdx.png)

![](https://i.imgur.com/o0cKEtE.png)

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

![](https://i.imgur.com/a3W45Zc.png)

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

![](https://i.imgur.com/Xb9T2qr.png)

![](https://i.imgur.com/8puEIgl.png)

![](https://i.imgur.com/Nz02Vbu.png)

![](https://i.imgur.com/MfLZb26.png)

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

![](https://i.imgur.com/dWbuoY4.png)

### Dai & PSM Dynamics Overview

#### Marko Stemberger

[1:13:51](https://youtu.be/jM5Fm74WL44?t=1183)

- Today, I want to show some developments during the latest price crash regarding the DAI ecosystem and the significance of PSM for maintaining the peg. 

![](https://i.imgur.com/gKKz91b.png)

![](https://i.imgur.com/PLyM4FL.png)

![](https://i.imgur.com/TIpizd2.png)

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

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

![](https://i.imgur.com/3HcrgV1.png)

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

![](https://i.imgur.com/32dHfVq.png)

- We developed a dashboard to view the risk parameters, volatility, and many more; please check out https://maker.blockanalitica.com/ and let us know your feedback.

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

![](https://i.imgur.com/q4wuSaZ.png)

- With the CEX trading volume, you get to see when 1000 WBTC is moving from Ethereum wallet to FTX?
- Rema: Currently, we do not follow on-chain balances, only for Uniswap and Sushiswap liquidity, but we do have this on our agenda ​

### Burning Foundation MKR

#### Andrew Burban

[1:33:10](https://youtu.be/jM5Fm74WL44?t=5590)

- As some of you may have read, we proposed a [pre-MIP](https://forum.makerdao.com/t/pre-mip-discussion-a-market-sentiment-based-strategy-to-burn-mkr/8089) to spark a discussion about the Maker Burn. I have a light understanding of how we burn. It is not entirely random; it is called the lerp function, and we sometimes burn at optimal times or suboptimal times. The idea would be to have something in place to reduce the overhead if there is any burning, otherwise we should not be burning. It would be an automatic thing that burns more Maker when it becomes a more optimal burn.
- Tom has been working with a friend to develop a strategy to counter the trade market. We have had reasonable success with it. The signals are very good; it is a matter of whether or not we listen to them, which we are working on. They apply very well to other coins created on the market. We can work on something that can be used for burning MKR as well. The price is going up, and you may not want to burn there, but if the market is scared, maybe that is a better time to burn. Last week was a good example of when we have been burning more. Although we maybe should not have been burning the moment MKR began dropping. We could have burned a little bit and then crank burning as we fell more and more. There could be many ways to approach that. Some people mentioned that when the P/E gets below a certain reef. We would be using something to identify whether the price of MKR is undervalued or just that the whole market, in general, is in a state of fear or panic. You can increase the burn during those periods and reduce burn when it is not necessarily optimal. We can have Dai that would be going towards the burn on standby. We want to burn much of the surplus buffer, 25% going right now, to get within the realms of however much we set aside towards burning continuously. Some of it can go through a DCS-type strategy. 
- The original suggestion of this involved short interest data, which is what we trade against. When people are shorting, they get really scared of the market once they maximize shorts, and typically those will mark low points. They will at least mark a local minimum if not a global minimum in price. It tends to line up well for protecting these points and could be a good place to increase the burn. When everyone is scared, without knowing what the price is or what direction the market is, you can probably identify that this might be a better place to burn, probably at a local minimum. You do not necessarily need to know what the price is. 

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

- Tom: This is an example of one metric we could use. I strongly recommend that we do not use only one metric in order to prevent potential manipulation.
- A simple metric like funding a loan, even an unrefined version of it, gives you a very tactical and metric-based strategy. It is like a data-based way to know when to burn so you are not leaving it up to human emotions and semantics. This is one sentiment base indicator, but there are a lot more. Glassnode and CryptoQuant have a nice selection of them. We have some Maker specific ones, like P/E. Suppose we had a small team of people working together on this. In that case, we could develop the right metrics and how to analyze them in a tamper-proof way, where the amount of money it would cost to manipulate the market to get us to burn would be ludicrous enough to potentially not happen.
- This is just one example of something that we could easily build and make it successful. Our backtest worked well; I did not want to blow everyone's mind. This is just an example of how it would be performed on the dip here. If anyone has any questions, feel free to ask me. 
    - Andrew: Those three levels exhibit where we increase how much we are burning. We might have a constant type of return, but we would start increasing the amount of burn once we hit a signal. As the market starts getting euphoric, you may want to reduce how much you are burning. 
- Tom: We do not want to use open interest because that can be unfair to shorts, but it was one metric that we could use to gauge market sentiment. 
    - LongForWisdom: I encourage everyone who has any ideas or comments on this topic to go to the [forum's thread](https://forum.makerdao.com/t/pre-mip-discussion-a-market-sentiment-based-strategy-to-burn-mkr/8089) and leave their thoughts there. 

## 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

## Credits

- Artem Gordon produced this summary.
- David Utrobin produced this summary.
- Gala Guillén produced this summary.
- Sai Teja produced this summary.
- Everyone who spoke and presented on the call, listed in the headers.
