Can Maker’s Rune Christensen Fix the Sad State of DAO Governance? - Ep. 534
Aug 22, 2023
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Rune Christensen, Co-founder of MakerDAO, discusses the disillusionment in the crypto space during bull runs and the failure modes of scaling up in DAOs. He introduces alignment engineering as a method to achieve constructive participation through tools, gamification, and incentives. The podcast explores the three phases of governance and the implementation of governance AI tools. They also discuss the launch of new tokens, the importance of governance boundaries, and the potential impact of Phase 2 of the Endgame Plan.
Implementing 'alignment engineering' through tools, gamification, and incentives can address governance challenges in DAOs.
Phased implementation of changes in MakerDAO, including rebranding and AI-driven governance tools, aims to promote inclusivity and efficient decision-making.
The introduction of sub-DAOs and AI-driven governance tools can mitigate concerns related to concentrated token holdings and foster a more decentralized ecosystem in MakerDAO.
Deep dives
Importance of Implementing Changes in MakerDAO
Roon Christensen, co-founder of MakerDAO, discusses the need for implementing a significant change in MakerDAO after facing challenges related to governance and decision-making issues. The early ideal of a DAO, where token holders collaboratively make decisions for the benefit of the entire ecosystem, is currently not working as expected. The naive model breaks down as the DAO grows larger, resulting in coordination problems and difficulties in managing expenses. Christensen proposes an approach called 'alignment engineering' to address these issues by designing tools, gamification, and advanced incentives that ensure constructive participation and help maintain alignment within the DAO.
The End Game Plan and Rebranding in MakerDAO
The end game plan in MakerDAO involves a phased implementation of changes, including a rebranding of the tokens and the introduction of AI-driven governance tools. With the aim to achieve high ossification and reliability, MakerDAO plans to launch a new stablecoin and governance token under a unified branding strategy. This new brand will help the ecosystem reach a broader audience, foster alignment between the user and governance communities, and promote a sense of inclusivity. Additionally, the introduction of sub-DAO farming will encourage long-term participation and investment, as stablecoin holders can farm governance tokens while having access to a wide range of sub-DAOs tailored to their interests.
The Role of AI Tools and Governance Boundaries in MakerDAO
The implementation of AI tools in MakerDAO aims to improve the ease of navigation and interaction with the governance system. These tools, such as search patterns, language models, and symbolic AI, assist users in accessing relevant information and making informed decisions within the boundaries defined by the Maker Atlas. While AI tools can enhance decision-making and reduce complexity, they are not meant to replace human judgment entirely. Humans serve as the final check and ensure that the AI recommendations align with the rules and principles documented in the Maker Atlas. The AI-driven governance tools, combined with the incentives provided by the sub-DAO model, foster collaboration, diversification, and learning, paving the way for a more efficient and responsive ecosystem.
Addressing Concerns and Mitigating Concentrated Holdings in MakerDAO
The concentration of MKR token holdings is a valid concern, as it can impact the decentralized nature of governance. To mitigate this, MakerDAO plans to introduce a phased approach that aims to achieve higher decentralization and distribution of tokens through the sub-DAO model. Sub-DAOs allow participants with aligned interests to collaborate and contribute to specific areas while minimizing conflicts. Moreover, the introduction of sub-DAOs enables competition and fosters collaboration, as participants choose the sub-DAO that aligns with their values and objectives. The AI tools and governance boundaries further enhance transparency and accountability, making it easier to detect and address any non-compliance issues. Overall, the phased implementation of changes, combined with the sub-DAO model and AI-driven governance tools, is expected to address the concerns related to concentrated token holdings and promote a more inclusive and decentralized ecosystem in MakerDAO.
Spark Protocol and Sub-Doubt Farming
Spark Protocol is a sub-doubt that aims to experiment with adopting a powerful codebase and determining which collateral to onboard. The goal is to avoid costly mistakes and focus on picking winners by dedicating attention solely to this aspect. By incentivizing users to participate in sub-doubt farming, the demand for DAI as a stablecoin can grow, potentially attracting new users and contributing to the overall growth of the ecosystem.
Enhanced DAI Savings Rate and Regulation Challenges
To address stagnation and showcase DAI as more than just a stablecoin, an enhanced DAI savings rate has been introduced to incentivize users to take the yield. This move also aims to signal to the market that DAI can offer yield opportunities. However, due to uncertain regulations and compliance challenges, certain restrictions, such as blocking American users, have been put in place. The project is focused on jurisdictions like South Korea and Japan, which provide clear guidelines and stability for crypto businesses, with the aim of rewarding such jurisdictions with value, innovation, jobs, and growth.
The height of the last bull run was when MakerDAO cofounder Rune Christensen felt most disillusioned by DeFi and DAOs. “I didn’t even see how Maker was going to survive,” Christensen tells Laura Shin in the latest episode of Unchained. Now Christensen is leading an effort to help DAOs escape their trough of disillusionment. He says the ambitious “Endgame Plan” for MakerDAO seeks to overcome “the central issue of voter apathy.” Will it work or are DAOs doomed to fail?
