Thread by @g_dip

A thread summarizing the latest Maker Drama™

How we went from onboarding a US Commercial Bank to discussing how to depeg from the US dollar in less than two months. (1/38)

First some context. MakerDAO uses token governance to make changes to the protocol.

Most changes can be boiled down to (a) new credit lines, aka "debt ceilings", (b) new expenditures, mainly for "core units" of contractors. (2/38)

The discussion that informs Maker's token governance happens on its Discourse forums and Discord server. These channels collectively comprise the "Maker Community" as you'll see it referred to. (3/38)

Now everyone in the community pretty much knows each other at this point. It's kind of like if they made the song "Hotel California" into a reality show.

Don't worry about casting, we've got plenty of characters already. (4/38)

The latest Maker Drama™ begins when, with the help of my company (RWA Co.), Huntingdon Valley Bank (HVB) was awarded a 100M Dai debt ceiling to help diversify Maker's real world asset portfolio out of USDC. (5/38)

This deal took an incredible amount of coordination to close. A good comparison for doing a deal in Maker is trying to get something through Congress - except the political parties are not overt and the politicians are occasionally anons operating behind cartoon avatars. (6/38)

The HVB deal was the culmination of approximately 6 months of work with various Core Units and stakeholders, not to mention the various real-world service providers required to complete the transaction flow. (7/38)

It wasn't obvious at the time, but this deal was apparently the glue holding together the entire DAO political allegiances. Shortly after the vote passed, lines started to be drawn. (We can't really know if this is true, but it's my story so deal with it.) (8/38)

In corner #1 there's the "futurists" (these are all names made up my me). The futurists are figureheaded by Maker's co-founder @runekek. (9/38)

The futurists are about advancing the vision of "clean money," i.e. the idea that Maker will be used to advance the obsolescence of fossil fuels, and by the "End Game Plan," a scaling plan from Rune that I've affectionately termed a Sci-Fi novel. (10/38)

In corner #2 there's the "centralists," who do not have as clear of a vision or leader. If I had to describe their position it's "get shit done." They are happy to sacrifice a bit of decentralization if it means something might actually happen in Makerland. (11/38)

The centralists don't necessarily have a figurehead, but if one were to emerge my bet would be on @SebVentures, as he's the most senior member of their ranks and (in my mind) has put forth the most proposals embodying their philosophy. (12/38)

In corner #3 are the "decentralists." This is the "ideological right" of the DAO and they want absolutely zero centralized dependencies for the protocol. It's an admirable goal. The problem is there has yet to be a good way to achieve this. (13/38)

The decentralists are probably the oldest political group in MakerDAO and have never really had a figurehead (as decentralists are wont to do). But in May, @ChrisBlec became their de facto figurehead when he got about 6k MKR staked to him by toeing this party line. (14/38)

There are a few other political ideologies in the community, but these are the three worth talking about as the balance of power between them controls the destiny of the protocol. (15/38)

Now it's important to understand the alignment of the various political parties in order to understand why they act the way they do. The futurists are mainly aligned with Rune and therefore their main allegiance is to the MKR token. (16/38)

The centralists have a lot of members on the DAO payroll, whether core units or delegates, and are therefore generally aligned with the operational apparatus of the DAO. At times, they've been able to align the VCs (who pack big MKR heat if you can get them to vote). (17/38)

The decentralists primarily align with Dai holders, but in an ideological way. I.e. they're more concerned with the censorship resistance of Dai than its utility in the ecosystem. (18/38)

They would argue that this *is* its utility in the ecosystem. They have Nikolai (@delete_shitcoin) on their side, Maker's other co-founder, and some of the OG engineers from the Core Units. (19/38)

When the bull market was raging, all of these underlying ideological differences were swept under the rug. Everyone was doing well. This worked until the market pulled back and the DAO started losing money. The mythical end of this era was the closing of the HVB deal. (20/38)

The futurists want to get the expenses that the centralists continue to incur off the DAO's balance sheet. They see corruption and waste in the core unit budgets. The centralists see vague dreams in the plans of the futurists, lacking practical next steps. (21/38)

Up until now, the decentralists have been largely ignored. In the bull market the futurists and the centralists had agreed on enough to shove them aside when it came to votes. (22/38)

The first major event that drew lines in the sand was the LOVE vote. LOVE stands for "lending oversight" and was intended to be a supervisory unit to the real world finance core unit(s). (23/38)

LOVE had broad support among VCs and the centralists, but no support from the futurists or decentralists. The unit was to be lead by @LucaProsperi who has done an excellent job of chronicling the saga here - dirtroads.substack.com/p/-42-valkyrie… (24/38)

Historically speaking, the LOVE unit itself should have been quite uncontroversial, but the meta had changed in the background and it was a victim of circumstance. The futurists and decentralists had found common ground. A new political alliance was born. (25/38)

After the LOVE vote, which had the highest voter turnout in Maker history, things descended quickly for the centralists. Facing a unified opposition, they began to suffer from internal pressure. (26/38)

It gets messy here. There was a coup-d'etat and everything. But an asteroid was about to hit Makerland. (27/38)

On August 8th, 2022 the US Department of the Treasury made the unfathomably stupid decision to sanction a piece of software - Tornado Cash. (28/38)

Immediately after this action, Circle, who has been spouting marketing nonsense about "muh DeFi" for years, blacklisted all USDC in the Tornado contracts. (29/38)

If you're unaware, MakerDAO is the largest single holder of USDC via its PSM mechanism. This isn't a new issue, after all that's why Maker was onboarding real world assets like HVB's loans in the first place. But the collective "oh shit" when this happened was palpable. (30/38)

The forum and discord exploded with activity. The decentralists replaced Blec with @ameensol as their de-facto leader. In my mind this marks the new era - the battle for the soul of Dai. (31/38)

(Sidenote - Somewhat humorously, @bantg has discovered a great twitter engagement strategy where he lurks in the Maker discord and waits for Rune to say something ridiculous and then tweets it, which is how this spilled out of the forums and into the media.) (32/38)

Now the final remaining point of common ground between the futurists and the centralists was that they both believed Maker needed to onboard real world assets at scale in order to deliver on the promise of Dai. That is, until Rune flipped sides. (33/38)

After Tornado, Rune ceased to believe that RWA was a viable option for the DAO. He has made his points here - forum.makerdao.com/t/the-path-of-… - and here - forum.makerdao.com/t/endgame-plan… (34/38)

Rune's latest plans are nothing short of radical - to depeg Dai from the dollar and to push all core units and non-crypto vaults to the theoretical construct of Meta-DAOs. He has the support of his fellow futurists and the decentralists. (35/38)

So where does this leave us? The centralists make excellent points about the impracticality of such radical plans. That Dai will be functionally useless if it's not pegged to the dollar. The decentralists and futurists retort that it needs to exists to be useful. (36/38)

For me, I intend to continue to learn and listen. I honestly don't know what the right path forward is yet. My gut tells me it's going to be somewhere in the middle of all these paths. How would you choose, anon? (37/38)

To get involved in Maker governance: forum.makerdao.com

For further updates on the inner workings of DeFi, please give me a follow. I'm currently helping to build a truly decentralized lending protocol called @ajnafi and still doing new work in the RWA space (38/38)