Aug 14, 2023

MakerDAO founder Rune Christensen joins "First Mover" to discuss the main issues surrounding coordination within DAOs and his "Endgame" plan to "decentralize the broken financial system & replace it with a system that benefits everyone."

Video transcript

Our next guest is looking to enhance dow governance and improve voter participation. Joining us now to discuss this maker, Doo founder Roun Christensen, welcome back to the show. Ru thanks for having me. All right, we're talking about improving dow governance and voter participation. I think this is the number one thing on the minds of anyone who is working on Dow's who's building a Dow, talk to us about some of the core problems that are facing dow right now that you think that um you maybe have a voice in solving. Yeah. And mega the biggest problem we always had with governance was accessibility. Uh You know, any dow is basically trying to do something brand new, right? That that's never been done before. And today it's just it can be very hard for people from the outside to come and, you know, sort of embed themselves in that participate in that. So with endgame as we call it, because it's supposed to be the, the, you know, the final overhaul that sets maker up for the long run, uh what we're trying to do is just make it a lot more easy for people to participate without having to, you know, go full time. Um But rather to sort of have, you know, have fun just uh be a user participate a little bit uh but still be able to meaningfully impact the system. And this way, actually tap into this unique power that exists in Blockchain and crypto, right, the power of community, the power of permission list, collaboration and permission this innovation. OK. Can you spell that out because it's, it's very lofty, but uh what makes it different than everything else? Uh Well, so I think, I mean, the probably the biggest difference is that we have just, I mean, maker, we, you know, we work very slowly and methodically. So what we have done is we have been, you know, we've maker has existed for eight years now, right? And we have been dealing with these issues, uh you know, longer than most other projects have existed. So we have tried to really deconstruct all the different innovations that we've seen in D I like what we've seen in D five summer. Uh and, and all the different projects that pop up, see their successes and their failures and then ultimately it together to this uh Endgame overhaul that ultimately, um I mean, the the number one biggest uh innovation that we're introducing is that we want to basically uh segregate the complexity system into these new ows as they're called, which are basically sort of uh submersed in governance. So it gets simpler and you get sort of straight to the action of what you want to participate in. OK. Can, can you provide a real world, can you provide an example of how that would work? Yeah. So um I mean, one example is uh Spark down, which is Spark protocol. Um So that is a new protocol that maker recently developed and released. Um And this protocol is basically uh sort of innovating on top of the, of our original uh crypto lending business, crypto, borrowing, collateralized, borrowing business. And so what's unique about Spark protocol is that it will not, it will not be operated by the coal maker dial. Uh It takes a lot of effort, it takes a lot of, you know, it takes a lot of specialized knowledge to um you know, correctly uh operate and, and um risk manage uh crypto collateralized platform. So instead it's much more suited to put that into a sub dial and then have users who specifically want to do that. But specifically, they want to uh hold governance tokens related to crypto colla borrowing and vote for that. And, you know, brainstorm different ideas, uh think about how to reach end users. So they can specialize uh on that particular focus in their community. And then you might have a different community, maybe they don't think this is interesting at all. Uh maybe what this other community they want to do is they want to focus on viewable assets. Right. So, they want to allocate into treasuries, they want to, uh, you know, do private credit or trade finance. And this is another area that takes a complete different set of specialized knowledge. Uh, if you had to ask a random person to, like, you know, learn how to do both and get sort of deeply embedded in both, then it, it's just very difficult. Right. It's, it's overwhelming, especially if it's stuff that you're not interested in. So with sub dials, we try to make it more like a game where you kind of like pick, pick you, you know, pick you what you want to do, right? And then you can just focus on that. Uh and, and that makes it more fun. Why don't just have separate dials? Well, that is, I mean, that is essentially what we're doing, right? We, I mean, there are, there are so they are ultimately they have separate tokens, uh they have separate brands, right? So like Spark is an example of a of a new brand that will, that's being developed for the purpose of having this, this uh separate out. But there are, of course, also still uh you know, very important things where you have a, you know, where you have economies of scale, where you have network effects, where you have good reasons to basically uh band together and scale as a large ecosystem and more than anything else. The number one thing uh where this really, uh you know, where this really has an impact is just the, the role and, and the coal liquidity of the Die ST Fund itself, right? So all of the sub, they basically share this to tap into the uh the economic strength of diet and allocate that in different ways, right? So they can uh you know, allocate it to crypto aly lending or real assets, maybe uh some will focus on, on real assets in Asia while others will focus on real assets in the West. Um But ultimately, it's the same uh you know, scaled up uh economic platform that they are basically uh applying in, in these more specialized ways. So you kind of get the best of both worlds where you get the flexibility of an individual, small and flexible community where people are aligned, but you also still share this large, you know, old secure and tested platform uh and the economies of scale and network effects that come with it. Now, um I know that it's not new knowledge that there's been some back and forth between maker Dow and a 16 Z. We had the VC firm months ago say that, you know, this progressive decentralization through sub doss maybe should slow down a little bit, you know, make your dough is sufficiently um decentralized thinking about those comments. Now, how would you advise other people who are building Dow to think about this solution that you're proposing? Um Let's let's start there. I don't want to make it too complicated. Yeah. So I think that we, I mean, we have actually seen uh already a number of projects uh taking an approach somewhat like this. I mean, one example is synthetics, for instance, that was actually uh an inspiration for us because they sort of took a lot of the complexity uh in their business and split it up into new uh I mean, what I would call, although they functioned slightly differently. Uh And it's also, I mean, there's been other examples of, of uh communities doing, doing, taking similar strategies. And generally, also when I talk to other projects, talk to other founders many times, they will say, yeah, we, you know, we're trying something similar because this is what we think works like, I actually think that fundamentally um this is probably the best solution available if you want to avoid being stuck with a centralized hierarchy forever, you know, if you really want to try to make a system where you can have a large community uh running the dow in a flat structure, I, I don't think you can get around having uh something like where you kind of, you, you, you sort of have to compartmentalize part of the decision making uh ability and wrap it in its own kind of uh responsibility and accountability through, you know, something like a token, something that, that means that if a particular, you know, segment of the dow makes a bad decision. They have to suffer a greater, you know, negative consequence for that bad decision. And if another one, if they make a good decision and they, they generate some good results, they should be able to, to, you know, get a better upside to that. Because if you don't have this, then as the dow grows just really, really, really big, eventually everybody just gets, you know, indifferent and sort of disconnected from uh the results of the actions because they're just kind of, you know, throwing, throwing stones in the ocean, kind of, right? They, they're, they're not really uh gonna see that impact on themselves, whether they do a good job or a bad job. Uh and then you get kind of a a, you know, a a negative spiral over time, right? A bad feedback loop. So kind of fix this by making it a lot more accessible for you to, to directly kind of, you know, um be exposed to what you're governing and what you're participating in and what you're evangelizing and uh bringing people closer to that and closer to the All right. Arun and in June maker Dow paved the way to purchase up to an additional $1.28 billion in us, government bonds by crypto asset manager block tower capital. What's the status of this? Any updates for us? Yeah. So uh black towers um structure called Andromeda, which is this uh which is uh basically uh a trust set up so that maker can interact with the real world. Um has been, yeah, I mean, so it, it was, it was on boarded a couple of weeks ago and it's been ramping up. Uh And I think right now it's at about 600 million um in, in active deployed rebel assets. Uh And I think, I mean, this is a having this ability to really scale up our exposure to re assets in a way that is very secure. Um And, and well designed, that's a key reason why now our, you know, now we're sort of complete in and I would say sort of shoring up the, the back end of the system uh so that we're ready to really scale. So the next thing we're looking for is things like uh um you know, setting a die savings rate that makes it more attractive for users to use the system. Uh And then also getting into uh releasing the ows as a part of the endgame plan. So people can find the sub out tokens. And this way we can also attract more users because as we attract these new users, we have really, really strong scalable ways to uh deploy the collateral assets of the protocol into uh high quality rew assets. All right, brun, thank you very much for joining the show this morning. It was wonderful seeing you again. That was maker do founder Arun Christensen.

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