'Darkest Days Yet': 'Purple Pill' Tell-All Details Years-Long Rift at Heart of MakerDAO Stablecoin Project
Penned by the stablecoin project's former CTO, "Zandy's Story" paints a clear picture of MakerDAO's current turmoil.
"Currently, the Maker development team is going through its most difficult challenge that I have witnessed during my 3.5 years with the project."
So begins a document obtained by CoinDesk, entitled "Zandy's Story," dated April 3, 2019. It tells nearly the complete history of MakerDAO, an ethereum-based project best known for creating the stablecoin DAI, from the perspective of one of its earliest supporters.
The 24-page document also clarifies the conflict at the heart of the so-called "Purple Pill Discussions" – a Signal chat group reported by CoinDesk on April 25 that appears to be causing a contentious rift at the top ranks of one of ethereum’s hottest decentralized startups.
In short, "Zandy's Story" details how two separate but distinct organizations built the tools that power the cryptocurrencies MKR and DAI. Yet the divergent views of these two organizations were bound to reach a breaking point, the document makes clear.
Who is Zandy?
"Zandy" is the online handle of Andy Milenius, who, until recently, was the chief technology officer of MakerDAO. The document was obtained via a third party, however, Milenius has since confirmed to CoinDesk he is no longer the CTO and that the document is authentic.
Over the course of more than 10,000 words, "Zandy's Story" tells the tale of how he became enamored with the possibilities of ethereum in 2015 and found his way to MakerDAO and its CEO, Rune Christensen. The story articulates why a stable cryptocurrency was an essential component of any smart-contract ecosystem.
It ends with a cadre of early supporters, Maker staff and Maker Ecosystem Growth Foundation board members trying to find a way to keep the two disparate parts of the project together. It's this middle-way effort that is referred to as the "Purple Pill" group.
In early 2019, Christensen had presented everyone with a so-called red pill and blue pill, the document says.
The "red pill" was following Christensen's lead: "The main focus was on government compliance and integration of Maker into the existing global financial system."
The "blue pill" was for those who did not want such a formal organizational structure. These parties would be allowed to work on the Multi-Collateral Dai (MCD) project until it was finished. Then their funding would be discontinued.
From Milenius's perspective, this blue pill contingent was mainly the team led by Nikolai Mushegian, CEO of DappHub and Christensen's original technical partner on the project. However, this faction was not solely members of the development team. Ashleigh Schap, from MakerDAO's business side, is also cited in the document as someone who shared concerns about MakerDAO's direction.
A report by The Block noted that Schap had also recently left the organization. Schap could not be reached for comment.
The document explains the origin of the name this way:
These discussions, as was made clear in a leaked legal letter from a group of board members who were allegedly pushed out, were not something Christensen was open to. "Zandy's Story" corroborates as much.
"There was only one way he could interpret it: conspiracy," Milenius wrote of Christensen, adding:
The MakerDAO story is one of company sub-units spinning off to solve immediate problems with long-term ramifications.
In its earliest days, the company now know as DappHub spun off from MakerDAO because Christensen and Mushegian couldn't get along, according to Milenius' account.
In 2016, with tension building, he writes, "Rune suggested that Nikolai form his own company as a way to keep their relationship separated and hopefully professional. From that day on DappHub has forever remained a place for misfits and weirdo genius Maker contributors that Rune can’t quite understand."
This tension would remain in MakerDAO from then on. "Zandy's Story" says there was always a contingent pushing for a more traditional corporate structure and another that wanted to invent a new kind of organization.
Shortly after Mushegian broke off, the MKR token was launched, giving the company a development fund, a pool of tokens that could be sold in order to pay for work on the project. A second spin-off would result when this fund morphed into the Maker Ecosystem Growth Foundation at the end of 2018.
At that time, the Milenius account says: "[Christensen] presented a document that outlined the core principles of the Foundation and how it would work in general. He chose the most morally upright early contributors to be board members to ensure that everyone would be satisfied, even those who were skeptical of him."
The foundation was established by the end of the year, reportedly with nine board members, five of which we named in previous CoinDesk reporting for the first time. Those board members, according to the Zandy account, were removed following the revelation of the "Purple Pill Discussions."
"The project has always been led by Rune in one way or another," Milenius admits late in his story.
Through the latter half of 2016, Christensen had actually distanced himself from the project to see if it could run on its own, Milenius reports. Then Polychain, the venture capital firm, announced its first fundraising round, and Christensen returned to help negotiate a sale of MKR to the pioneering token investment firm.
Negotiating the deal caused Christensen to realize that "he needed to step up and take responsibility for his creation," Milenius writes.
The formation of the Maker Ecosystem Growth Foundation appears to have cemented that authority, as shown when Christensen demonstrated he could remove recalcitrant board members at will.
"He refused to put the project at legal risk by engaging in open dialogue," Milenius writes, adding additional context with the following:
Concurrently, Mushegian, still a major token holder, attempted to bring the issues before MKR holders, as he recounted in an April 7 blog post.
"I seem to be the only one with full visibility (now removed) who is not under a draconian NDA," he wrote.
A MakerDAO spokesperson did not respond to a request for comment as of press time.
"Zandy's Story" was written as a plea for Christensen to correct course, but in a post in the MakerDAO chat forums on Thursday, Milenius referenced CoinDesk's prior reporting on the conflict, writing the following:
Milenius later communicated that he used the word "settled" in the colloquial, not legal, sense of the word.
Christine Kim contributed additional reporting.
The full document can be found below:
Zandy's Story by CoinDesk on Scribd
MakerDAO CEO Rune Christiansen image (left) via Twitter
The leader in news and information on cryptocurrency, digital assets and the future of money, CoinDesk is a media outlet that strives for the highest journalistic standards and abides by a strict set of editorial policies. CoinDesk is an independent operating subsidiary of Digital Currency Group, which invests in cryptocurrencies and blockchain startups. As part of their compensation, certain CoinDesk employees, including editorial employees, may receive exposure to DCG equity in the form of stock appreciation rights, which vest over a multi-year period. CoinDesk journalists are not allowed to purchase stock outright in DCG.
Learn more about Consensus 2024, CoinDesk’s longest-running and most influential event that brings together all sides of crypto, blockchain and Web3. Head to consensus.coindesk.com to register and buy your pass now.