Babbitt Column | Cao Yin: Maker's Easter Eggs reveal what major business innovations are possible in the future?

Author: Cao Yin

Editor's Note: The original title was "DeFi Review Issue 4-Special Part 2: Maker's Eggs"

Today I will continue to comment on the Maker Foundation's completely decentralized solution. The Maker Foundation released 13 draft MIPs yesterday as a plan for the complete decentralization of Maker in the future, and will vote at the end of April. If it passes, the Maker Foundation will completely hand over the operation to the community, and the Foundation will disband itself.

Relevant interpretation can be seen in the previous DeFi Review:

I read through and studied all the MIPs in detail for the first time. After reading, in addition to admiring the Maker Foundation ’s serious and responsible attitude to governance, I also found some very interesting “eggs” that reveal the future of Maker. Major business innovation.

1. Synthetic assets on Maker?

In MIP1, the Foundation listed Maker's Problem Space list, and the problems in the list are all topics that are critical to the operation of Maker. I found in the Problem Space list that the Maker Foundation specifically mentioned "synthetic assets"

MIP1 link:

At present, the assets issued by Maker are only Dai that is anchored with 1: 1 of the US dollar, and under the slogan of On-chain exposure to any asset, the DeFi synthetic asset project Synthetix that also uses the over-collateralization mechanism can not only mint the iUSD stable currency, but also Synthesize dozens of other assets, even including stocks and silver.

Bitshare, the former owner of Maker founder Rune, has long been able to mortgage and cast various on-chain synthetic assets, including the US dollar.

In fact, it is not complicated to synthesize multiple assets on Maker, the key lies in the price prediction mechanism of the predictor. Moreover, unlike Synthetix and Bitshare that mortgage their own project tokens SNX and BTS, Maker MCD's mortgage assets are mostly ETH, and their liquidity and stability are far superior to BTS and SNX. Therefore, in theory, synthesis on Maker Assets are much stronger and more convenient than Synthetix and Bitshare.

However, in addition to the Problem Space list of MIP1, no governance system involving synthetic assets was found elsewhere in the 13 MIBs. Therefore, Maker should not provide assets other than Dai in the short term, but in the medium and long term, Maker's launch of multiple synthetic assets is a high probability event.

2. Maker wants to build an off-chain reserve bank?

Also in the Problem Space list of MIP1, Maker mentioned the Guardian Entities and Reserves, and defined “buying and managing a diversified reserve structure. Through off-chain reserves, Dai ’s performance in the market plunge was improved. Reliability. Custodians and reserves will also reduce the risk of MKR being diluted "

MIP1 link:

MIB put forward the concept of reserve assets, which will naturally remind people of the central bank mechanism of sovereign countries. Although Maker is hailed by the DeFi community as "DeFi central bank", Maker is actually substantially different from modern central banks. Maker cannot bear the most important responsibility of the modern central bank: the role of the last player cannot provide the market with ultimate liquidity. From Maker's simple definition of the functions of Guardian Entities and Reserves in MIP, Maker seems to want to establish a mechanism similar to central bank reserves to provide liquidity for Dai in extreme cases, and can also avoid diluting additional issuance of auctions. .

But the question is coming, where does Maker's reserve assets come from?

Although there are a large number of mortgaged assets in Maker's Vault, the Maker Foundation can neither and cannot use these contracts to mortgage assets. The most likely reserve asset is the large amount of MKR held by the Maker Foundation. Maker may auction part of the MKR held by the foundation, and use the raised USD as a reserve and keep it off-chain. Once another plunge time like 312 occurs again, Maker can immediately use the USD in the reserve to buy ETH or USDC USDC), and synthesize DAI and put it on the market to solve the liquidity crisis.

I have suggested similar monetary policy operations before, suggesting that Maker can urgently increase MKR as MCD collateral in a similar emergency in 312, and then cast the MKR emergency mortgage in the hands of the Foundation into DAI and put it on the market. Compared with my suggestion, Maker auctioned MKR directly in the bull market and put it on the market during the emergency period, which is better in terms of capital utilization, legitimacy, and security.

At present, only Guardian Entities and Reserves are mentioned in MIP1, so it can be considered that this is just an immature idea of ​​the Maker Foundation. It remains to be seen whether and how it will be implemented.

3. Maker wants to economically motivate voters?

Still in the Problem Space list of MIP1, the Foundation mentioned Vote Incentives. However, it is different from the Guardian Entities and Reserves and Synthetic Assets introduced earlier. In 13 MIPs and the Blog, the Foundation repeatedly mentioned the need to economically incentivize voters to increase the current very low turnout rate and create an active streaming democratic proxy voting ecology.

MIP1 link:

The starting point is good, but the question is, how does Maker motivate voters? And how to additionally incentivize proxy voters? At present, there are two main reasons why a large number of MKRs do not participate in voting. 1. The threshold for Maker governance is too high, and the energy required is too large. MKR holders do not have enough capacity and energy to participate in voting. 2. Many MKRs cannot participate in voting in exchange accounts.

Maker's future proxy voting mechanism will partially solve the problem of Maker's governance threshold, but it cannot solve the second reason that hinders users from voting. Therefore, if Maker wants to increase the voting rate, the economic incentive for MKR voters should be greater than the potential benefit of trading MKR, so that MKR holders are willing to transfer MKR from the exchange account to the wallet to participate in the vote.