Plagued by financial losses and apathy by its members, MakerDAO Founder Rune Christensen proposed on May 31 a radical new restructuring plan for the blue chip DeFi project.
“The governance processes and political dynamics… fundamentally aren’t compatible with the reality of effectively processing complicated real-world financial deals,” Christensen wrote, asserting that the current structure will not allow Maker to compete with the world’s top financial institutions.
In a post to Maker’s forum titled ‘The Endgame Plan’, Christensen outlined a roadmap to improve governance, expand Maker’s utility, and bolster its sustainability for the long term. He also bemoaned the complexity and opaqueness of Maker’s structure.
The plan, which Christensen predicts will be realized “many years out in the future,” includes restructuring the protocol around a series of “MetaDAOs” or subDAOs with distinct tokens, creating voting committees to align governance objectives across its ecosystem, and community, and developing new products.
The new products include a synthetic ETH token targeting Ethereum’s forthcoming chain-merge, and a continuation of the protocol’s pivot to embrace real-world assets (RWAs).
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Christensen highlighted the opportunitiesMaker may take advantage of in the bear market. He said Maker has regained its position as the largest DeFi protocol by total value locked.
“Maker must again lead the industry [by] tapping into MetaDAOs to overcome our fundamental problems,” he said. In the report, Christensen said MakerDAO is in the red.
Christensen also reported that MakerDAO operated at an annual loss of $9.4M and was “no longer profitable.” The report did not disclose more details on when, or at what rate, Maker was in the black.
He acknowledges that it is hard for many in the community to see how they can make a difference through Maker’s existing levers of governance because of “how overwhelmingly complex and opaque Maker governance seems.”
Further, MKR holders complain that the income generated by the protocol is perceived to disappear into Maker’s core units, which “operate at levels too complex for community members to understand and see results from.”
“We have reached a point where it is basically impossible to try to make any kind of change or even discuss ideas without upsetting people that are entangled in this uncontrolled web of relationships and often have conflicting incentives.”
Christensen believes that restructuring MakerDAOs core units as MetaDAOs will address many of the issues the protocol is experiencing. The small and specialized subDAOs will allow the core units to autonomously pursue independent and aggressive growth strategies without being hindered by the “single-threaded governance process” and factionalization within the broader Maker ecosystem. MetaDAOs will also be tied to Maker’s main DAO through tokenomics and infrastructure.
MetaDAOs will be organized around their own ERC-20 tokens. Tokens will be distributed to DAI users, Maker vault owners, and MKR governance participants, with Maker Governance also retaining a share of the tokens.
“If useful innovation is rewarded and dead ends result in a loss of business, a very tight feedback loop is created where the MetaDAOs can continuously iterate… in a decentralized evolutionary process,” he wrote.
Christensen also notes plans to launch the $MANO token to reward and reorganize its oracle and staking network.
The post also discusses plans to launch a synthetic ETH token called Maker Ethereum ($MATH).
Maker’s founder describes the product as a bridge between native ETH and staked ETH tokens, offering significant liquidity alongside exposure to ETH staking rates. He said a synthetic ETH token can be quickly bootstrapped by making a simple wrapper around a liquid staking token such as Lido Staked ETH, before launching a “fully-fledged” asset once the technology has been built.
Incentives in the form of a new $MZR token will also be distributed to wallets using MATH vaults to mint DAI tokens.