A16z, an investor in Maker with power to sway votes in decision-making, laid out its own vision for the protocol’s path forward, pushing back against some arguments of MakerDAO founder Rune Christensen’s “Endgame” manifesto on how to make Maker more decentralized and censorship resistant.
As a decentralized autonomous organization (DAO), the platform is governed by blockchain-based codes and votes by maker (MKR) token holders, who discuss all proposals and decisions in the protocol’s forum. A16z owns a significant amount of MKR tokens as an investor and therefore boasts voting power and influence on which proposals will eventually gain approval.
The platform is in the middle of a makeover, and the debate between proponents of prioritizing decentralization versus boosting growth touches on a fundamental dilemma for cryptocurrency protocols.
"Currently, MakerDAO is wrestling with the trade-offs between growing the protocol or hardening it against regulatory risks,” Dustin Teander, an analyst at crypto intelligence platform Messari, told CoinDesk. “Decentralization has to play a part, of course, but a small, decentralized product doesn't actually solve the market problem for the people that need it."
The note, authored by Porter Smith, a partner at a16z, advocates for changes that would improve decentralization without impeding growth and comply with the current legal and regulatory environment. This includes improving the current system based on Core Units, instead of breaking up the protocol’s governance structure into smaller units called MetaDAOs.
“The Core Unit structure is arguably already legally decentralized,” Smith wrote. “Introducing MetaDAOs likely does not change this analysis, nor lead to more organizational resiliency from a strictly legal perspective.”
The note said a16z would support “experimentation through smaller, self-contained proposals to get a baseline for how proposed changes might work (or not) in practice.”
“Maybe experimenting with one MetaDAO (or one per type), iterating, and then rolling out an organizational change with real data and live experience could strike the balance here,” Smith wrote in a comment on the forum.
Rune Christensen unveiled an ambitious roadmap for MakerDAO’s future in May, tagged as the Endgame plan, to make the protocol truly decentralized and resistant to any potential overreach and censorship from governments. His plan included free-floating DAI and ditching centralized assets from reserves that could be, in theory, blacklisted or seized.
In the short term, however, MakerDAO contributors doubled down on growth and voted for incorporating real-world assets such as $500 million of government-issued Treasury bonds into the protocol’s reserves, in an attempt to capture revenue from yields and build in incentives for MKR and DAI holders to attract new users.
Tensions between rival factions in the protocol's governance go back at least to this summer, when investors and founders came face to face in a voting about the protocol’s lending oversight unit.
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