openskyComposable Recap 9
Stability, Security and Deep Work… The last week was dedicated to discussions of the Stability Scope. An unstable stablecoin is like yesterday’s papers. Useless. Risk management is a key element of DAI’s stability and MakerDAO is happy to have BA Labs as advisors here. Another important aspect of stability is managing and monitoring what RWA arrangers are doing. After all just two entities, Monetalis Clydesdale and BlockTower Andromeda manage the majority of MakerDAO’s RWA allocation. While t...
openskyComposable Recap 8
Igniting the future… MakerDAO co-founder Rune Christensen is now hosting weekly calls to further the development of the Governance AI Tools (GAIT). Recently all delegates and facilitators have been tasked to prepare material for the AI system to digest. https://forum.makerdao.com/t/atlas-and-gait-call-tasks-for-next-week/22458 But first, we want to ask our readers to apologise the missing edition of this newsletter. Last week saw us confronted with an endless stream of obligations both privat...
MKR AVC member. Researching all things MakerDAO. Self custody is the future.
openskyComposable Recap 9
Stability, Security and Deep Work… The last week was dedicated to discussions of the Stability Scope. An unstable stablecoin is like yesterday’s papers. Useless. Risk management is a key element of DAI’s stability and MakerDAO is happy to have BA Labs as advisors here. Another important aspect of stability is managing and monitoring what RWA arrangers are doing. After all just two entities, Monetalis Clydesdale and BlockTower Andromeda manage the majority of MakerDAO’s RWA allocation. While t...
openskyComposable Recap 8
Igniting the future… MakerDAO co-founder Rune Christensen is now hosting weekly calls to further the development of the Governance AI Tools (GAIT). Recently all delegates and facilitators have been tasked to prepare material for the AI system to digest. https://forum.makerdao.com/t/atlas-and-gait-call-tasks-for-next-week/22458 But first, we want to ask our readers to apologise the missing edition of this newsletter. Last week saw us confronted with an endless stream of obligations both privat...
MKR AVC member. Researching all things MakerDAO. Self custody is the future.
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What can an AVC do?
A recent MIP102c2 by KISS AVC introduced specific requirements for Ecosystem Actors to respond to qualified requests.
https://forum.makerdao.com/t/mip102c2-sp26-mip-amendment-subproposal/23348
In essence it would require parties that are paid for by MakerDAO to respond to requests by recognized governance participants within seven days.
The MIP was unanimously supported during creation and the RFC phase, but then voted against by some delegates on the grounds that it consituted “micromanagement” or at least a slippery slope way to the same.
This sparked a lively debate about what ADs should and can do when working with AVCs, which I will not go into now.
For this newsletter the more meaningful question is what AVCs can do, and what they can not or should not do. What is the separation of powers, so to say, between AVCs, delegates and Facilitators.
In my understanding AVCs role was there to make suggestions representing the particular outlook these groups of MKR holders have, on how the DAO should progress.
It would then be up to Facilitators to help promising suggestions to become part of the scope MIPs. KISS AVC took a more direct approach and proposed MIP102c2 change requests recently. After ratification these suggestions become part of the scope MIPs. Facilitators could help improve the change requests during the one month long RFC phase, and so could the rest of the community.
But since these MIPs should have direct effects, they need to be specific. Which opens them up to the criticism of constituting micromanagement. Maker’s constitution, the so called Atlas, is specifically prohibitive of AVCs assuming fine-grained control. This privilege is reserved for Facilitators and their Advisors.
Does that mean that AVCs should not propose MIP102c2 change requests at all? These requests will always contain specific guidances, or they would be toothless.
The ensuing dialogue has so far not conclusively resolved. I will try to offer my opinion.
It stands to reason that groups of non-experts, that AVCs are, should not try to direct experts, wherever possible. It would be very detrimental, for instance, to have AVCs try to set stability fees, or dictate smart contract coder, however well-meaning the intent was.
But for something that impacts them directly, like the response time of MakerDAO paid contributors, they are experts, and can reasonably set specific guidelines.
The more specific question then becomes not when micromanagement starts (which is very vague and subjective), but whether the proposed specific changes have a direct impact on AVC work, where AVCs are experts, or not. This is easy to decide.
The separation of powers should be along circles of competence, very similar to how agile or other methodologies delineate it.
Two posts worth reading in detail are:
https://forum.makerdao.com/t/protocol-economics-report-2024-01/23751
TL;DR Dai Demand is still shrinking, but the protocol is very profitable.
And another great one is this post by BA Labs:
https://forum.makerdao.com/t/risk-month-in-review-february-2024/23760
BA Labs has a full-fledged protocol responsibility with Spark Lend in addition to Maker Core and is definitely capable of handling both extremely well, while developing whole new ways to assign risk parameters.
DAI supply update
Thankfully, DAI supply has recovered a bit and added 200M since our last newsletter.
Nevertheless, the overall trend is concerning. USDT has added 12% supply in the last 3 months, and USDC 19%.
It can be argued that we’re in the middle of the next bull market, and still DAI demand (driving supply) has not been comparable to the big two. We think DAI has in some ways already captured its entire market (ETH maxis with a focus on decentralization), while DSR rates are below what USDC and USDT holders can get (5.7% on USDC on Kraken, 11-16% for USDT on Binance).
Most likely, Maker or its subDAOs need to aggressively expand to other chains natively and court protocols there to be able to compete long-term.
Voting update
Apart from two SparkLend parameter changes, I want to point out this improvement to the SmartBurn Engine that is available to vote, now.
https://vote.makerdao.com/polling/Qmat6oFs
Ad section
If you have MKR and want to influence governance, join KISS AVC. A simple, effective AVC with one meeting a week.
If you want to delegate, please consider delegating to a KISS AVC affiliated delegate, such as Bonapublica, vigilant, BLUE or PenguinSolider.
What can an AVC do?
A recent MIP102c2 by KISS AVC introduced specific requirements for Ecosystem Actors to respond to qualified requests.
https://forum.makerdao.com/t/mip102c2-sp26-mip-amendment-subproposal/23348
In essence it would require parties that are paid for by MakerDAO to respond to requests by recognized governance participants within seven days.
The MIP was unanimously supported during creation and the RFC phase, but then voted against by some delegates on the grounds that it consituted “micromanagement” or at least a slippery slope way to the same.
This sparked a lively debate about what ADs should and can do when working with AVCs, which I will not go into now.
For this newsletter the more meaningful question is what AVCs can do, and what they can not or should not do. What is the separation of powers, so to say, between AVCs, delegates and Facilitators.
In my understanding AVCs role was there to make suggestions representing the particular outlook these groups of MKR holders have, on how the DAO should progress.
It would then be up to Facilitators to help promising suggestions to become part of the scope MIPs. KISS AVC took a more direct approach and proposed MIP102c2 change requests recently. After ratification these suggestions become part of the scope MIPs. Facilitators could help improve the change requests during the one month long RFC phase, and so could the rest of the community.
But since these MIPs should have direct effects, they need to be specific. Which opens them up to the criticism of constituting micromanagement. Maker’s constitution, the so called Atlas, is specifically prohibitive of AVCs assuming fine-grained control. This privilege is reserved for Facilitators and their Advisors.
Does that mean that AVCs should not propose MIP102c2 change requests at all? These requests will always contain specific guidances, or they would be toothless.
The ensuing dialogue has so far not conclusively resolved. I will try to offer my opinion.
It stands to reason that groups of non-experts, that AVCs are, should not try to direct experts, wherever possible. It would be very detrimental, for instance, to have AVCs try to set stability fees, or dictate smart contract coder, however well-meaning the intent was.
But for something that impacts them directly, like the response time of MakerDAO paid contributors, they are experts, and can reasonably set specific guidelines.
The more specific question then becomes not when micromanagement starts (which is very vague and subjective), but whether the proposed specific changes have a direct impact on AVC work, where AVCs are experts, or not. This is easy to decide.
The separation of powers should be along circles of competence, very similar to how agile or other methodologies delineate it.
Two posts worth reading in detail are:
https://forum.makerdao.com/t/protocol-economics-report-2024-01/23751
TL;DR Dai Demand is still shrinking, but the protocol is very profitable.
And another great one is this post by BA Labs:
https://forum.makerdao.com/t/risk-month-in-review-february-2024/23760
BA Labs has a full-fledged protocol responsibility with Spark Lend in addition to Maker Core and is definitely capable of handling both extremely well, while developing whole new ways to assign risk parameters.
DAI supply update
Thankfully, DAI supply has recovered a bit and added 200M since our last newsletter.
Nevertheless, the overall trend is concerning. USDT has added 12% supply in the last 3 months, and USDC 19%.
It can be argued that we’re in the middle of the next bull market, and still DAI demand (driving supply) has not been comparable to the big two. We think DAI has in some ways already captured its entire market (ETH maxis with a focus on decentralization), while DSR rates are below what USDC and USDT holders can get (5.7% on USDC on Kraken, 11-16% for USDT on Binance).
Most likely, Maker or its subDAOs need to aggressively expand to other chains natively and court protocols there to be able to compete long-term.
Voting update
Apart from two SparkLend parameter changes, I want to point out this improvement to the SmartBurn Engine that is available to vote, now.
https://vote.makerdao.com/polling/Qmat6oFs
Ad section
If you have MKR and want to influence governance, join KISS AVC. A simple, effective AVC with one meeting a week.
If you want to delegate, please consider delegating to a KISS AVC affiliated delegate, such as Bonapublica, vigilant, BLUE or PenguinSolider.
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