MakerDAO’s ‘endgame plan’ passed in vote

MakerDAO (MKR) members vote in favor of founder Rune Christensen “Endgame Plan” by an overwhelming majority of 80%. Some observers criticized the voting process for its lack of decentralisation. He claimed that Christensen influenced 63% of the votes in support of his proposal.

In May, Christensen published the Endgame Plan, a roadmap detailing his plans to restructure MakerDAO to achieve decentralization over the next 10 years. The founders have spoken out against Maker’s governance model since the dissolution of the Maker Foundation in 2021.

He criticized the lack of interest from community members to vote on key protocol proposals as a major factor limiting Maker’s ability to manage difficult financial agreements. Therefore, he proposed dividing the producer into several self-sustaining units, called ,MetaDao.,

Each MetaDao will have its own token managed by a committee that is separate from Maker’s broad-based governance system. This means more decentralisation. The new structure is designed to neutralize the impact of competing interests within the MakerDAO community.

Earlier in October, Christensen put forward several proposals for a community vote. Voting closed on 24 October. Members ratified a proposal to transfer $1.6 billion in USD Coins, or USDC, to Coinbase Prime to earn an annual yield of 1.5%.

He also approved plans to unbundle MakerDAO’s real world finance core unit. The unit is responsible for driving the protocol’s real-world investments in things like government bonds or Treasury bills.

Similarly, Events and Strategic Happiness Core Units were also approved. MakerDAO has since pledged about $500 million in corporate bonds and government Treasury securities out of its $8.83 billion reserve.

This is part of a deliberate plan to diversify the collateral backing of the $6.24 billion token, Maker’s DAI stablecoin.

Overdependence on USDC

Christensen is concerned about DAI’s dependence on USDC, an accepted crypto asset. DAI is 38% backed by USDC. It is the single largest collateralized asset backing the token.

To this extent, members of MakerDAO approved another proposal to move $500 million worth of USDC to hedge funds to Appaloosa and crypto broker Monetelles. Collected by Bitcoin and Ethereum, USDC will be sent to Coinbase as a loan at a yield of up to 6% per year.

Members also approved the creation of a Vault of STETH, a derivative of Ethereum, as an endorsement of DAI. Again, part of the plan to spread out the reserve risk of stablecoins.

Overall, Christensen’s proposals received overwhelming support from the MakerDAO community. However, its tie-up with centralized institutions like Coinbase raised eyebrows.

In addition to the above, Christensen has also announced plans to separate the protocol from regulators and censorship. He plans to float DAI while allowing the stablecoin to “dip” from the US dollar over the next two to three years.

In the meantime, he will aggressively hoard Ethereum (ETH) to help secure the DeFi protocol.

Christensen effect questioned

MakerDAO is a crypto lending platform built on Ethereum. The protocol has over $7.98 billion in total value locked (TVL) and is arguably the most influential of decentralized finance (DeFi).

While Christensen’s ‘endgame’ easily passed the governing vote, the process was criticized for its lack of decentralisation.

Sebastian Derrivaux, Head of Asset Liability Management at MakerDAO, claimed that the founder somehow influenced 63% of the 122 addresses that took part in the vote. He also said that Christensen had an economic influence of more than 74% of the vote.

Only a very small section (6%) of those who voted in favor were not occupied or under Christensen’s influence.

“Most of the big voters are representatives (a quiet system). They are paid according to the amount of MKR that is delegated to them,” DerryVox tweeted, “So it’s fair to say that when your biggest sponsor is 51%+ of your compensation, you listen. Which, oddly enough, brings centralization.”

“This should not happen because MKR is quite decentralized in holdings, just that people don’t vote or delegate. A16z is one of them that does a little bit of it,” he said.

MakerDAO and Endgame

Andreessen Horowitz (a16z), a significant holder of the MKR token, voted against Endgame.

“The core unit structure is arguably already legally decentralized,” the venture capital firm said. “The introduction of MetaDAO likely does not change this analysis, nor does it lead to greater organizational flexibility from a strictly legal standpoint.”

Hsu, strategy lead at Flashbots and researcher at Paradigm, voted “no” to Endgame. He Explained His verdict on Twitter:

“The endgame plan is an extraordinarily poor proposition. It’s really sad for Maker that he passed the hint (let alone the push to face strong and justified criticism by Rune). It’s really ill-advised that an offer Which dramatically changes the basic vision, strategy, economics, virtually every part of the protocol, could have passed with less than 15% vote participation. There must have been at least a quorum.”

According to press, MKR, the native token of the MakerDAO ecosystem, is up 1.3% to $944. According to CoinGecko, the coin is down 85% since its peak at $6,292 in May 2021.

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