The Endgame Plan is an ambitious initiative that aims to create a finite roadmap for MakerDAO that step by step leads to a predetermined, immutable end state many years out in the future, while significantly improving governance dynamics and tapping into the raw power of modern DeFi innovation.
I have been relatively inactive in Maker Governance since the dissolution of the Foundation, but have now returned to try to push through this ambitious plan and governance overhaul. A key objective for me is to deal with the major contradictions and challenges that I see, and to also ensure that the project gets on a path towards a truly decentralized equilibrium.
Some highlights of Endgame Plan that will materialize in the short term, and are described in this post:
- Quickly launch a Synthetic ETH product that allows Maker to tap into the Merge
- Incubate a fully fledged, economically sustainable DAO with significant synergy with Maker
- Yield farm the new DAO token to Dai, ETH vault and MKR holders that participate in governance
- The farming rewards means this will immediate drive governance participation and help deal with voter apathy and centralization of governance, and create utility for MKR holders
- Establish stronger norms and codes of conduct for governance participants, helping to provide a check on the power of Delegates and Core Units which will significantly grow once voter incentives via yield farming are in place
Contents
This forum post is a shorter version of the full document, which will be released later once the community has had a chance to absorb this introduction (which is still very long). The post for now contains the two first parts of the full Endgame Plan document.
- Part 1: Introduction
- Part 2: Endgame Plan Launch
Fundamentally, the Endgame Plan aims to transform Maker from an unclear structure towards a reality where all aspects of MakerDAO are well documented and understood, and operate based on defensible incentives and derisked processes
First lets spend a moment to look at the organizational chart of Alphabet, formerly google. Alphabet consists of Google, which is the core driving force of the organization and is given complete autonomy and full control over its key resources and products, such as search and ads.
In the same holding company, but separate from Google, are the “Alpha Bets” which can best be described as various moonshots that operate as if they are startups, but are supercharged with the muscle and technology of Google and the rest of the Alphabet portfolio.
This means that Alphabet is a one-size fits all strategy where the core of the company operates with a focus on steady growth and returns above all, while being supported by risky ventures that are fully autonomous, and are allowed to take major risks and to fail, but that also have the potential for outsized returns and even in theory, could match or even exceed the success of Google.
Obviously, the Endgame Plan isn’t trying to turn Maker into Google, but it is useful context to understand the reasoning behind googles structure in order to better understand the Endgame Plan
MetaDAOs are the primary tool proposed by the Endgame Plan, and are the key that unlocks the potential of MakerDAO by establishing dynamics that fit very well into a decentralized and transparent ecosystem. They allow Maker to measure the value and potential that currently exist in the ecosystem and the workforce by wrapping tokens around it, and then by seeding a community through distribution of the tokens, can supercharge the potential of all the value which exists, but is currently mostly hidden and deprioritized.
The examples of the incredible amounts of hidden value in Maker include: A standalone fixed rates protocol, the worlds oldest decentralized oracle network and the best developed real world asset pipeline in the industry, and most importantly a massive and highly competent and motivated team that is unmatched in any other decentralized project.
Example of RWA MetaDAO
One of the most obvious examples of the power of MetaDAOs is the deadlock that is occuring with real world assets, where it turns out that the governance processes and political dynamics that have developed in Maker fundamentally aren’t compatible with the reality of effectively processing complicated real world financial deals and be able to compete with the worlds top financial institutions. MetaDAOs allow Maker to free itself from trying to directly manage and become specialized in the complexity of Real World Asset transactions, and instead simply incubate MetaDAOs that can then develop more specialized and better suited governance dynamics to allow them to overcome the barriers that Maker got stuck in. Maker can then use the already well tested and understood D3M construct to let these MetaDAOs carry out the RWA work on behalf of Maker, with much less overhead and complexity for Maker. The main question becomes comparing the performance of different MetaDAOs and deciding who to empower more. If useful innovation is rewarded and dead ends results in a loss of business, a very tight feedback loop is created where the MetaDAOs can continuously iterate on how to make RWAs work in DeFi, in a decentralized evolutionary process.
Part 1: Introduction
This section focuses on background knowledge of the current state of Maker and DeFi
After the end of the crypto bull market conditions are emerging that are similar to those in the last crypto winter, which was very favorable to Maker and where Maker was essentially leading the entire industry.
This includes Maker returning to the spot as the largest protocol in DeFi, the Merge coming up which will further solidify Ethereums lead and bolster all platforms that are already rooted on Ethereum - most of all Maker, and the effects of a bear market where suddenly fundamentals become the focus while hype stops being a factor.
After the 2021 crypto bubble, it is clear that the industry has moved forward significantly since the last bubble in 2017. But as the tide recedes it is clear that the top projects have not changed at all, it is the same names, such as Maker, Aave and Uniswap that are leading the industry, while all the newest additions have not even been able to survive, but have effectively been wiped out. This shows that we cannot expect radical innovation to continue in DeFi in particular. The main usecases and primitives have already been discovered, and furthermore, even those major usecases are struggling to generate sustainable growth that isn’t dependent on the bubble cycle, with stablecoins as perhaps the only significant outlier that is already being used globally.
Ethereum is clearly dominant with the merge coming up, while all other blockchains have basically failed and rather than achieve organic network effects are all mostly dominated by just a single protocol with no clear path to how more will emerge.
The main value that has been added to the table that can be considered a new generation of decentralized blockchain apps that have innovated beyond the original primitives is in the form of more intangible and social benefits, including NFTs and yield farming. However the potential of this new value has not really been utilized properly for anything else than powering ponzi schemes.
This means that Maker has a unique opportunity to once again take the lead in the industry.
Maker didn’t invent stablecoins, but was the first project to integrate the various elements together in a way that properly enabled mass adoption and a sound business case.
Now, with MetaDAOs as the silver bullet, Maker can consolidate everything we’ve already started and get into position to tap into the new value creation possibilities that exist in the new generation of DeFi.
But before we get started we must first understand the challenges we face.
One thing to keep in mind as for this list, is that every item that’s listed will later be addressed again after MetaDAOs have been introduced, and then it is made clear exactly how MetaDAOs help solve these specific problems.
The most common complaint amongst MKR holders is, in my view, that it is not clear why MKR will have value. There is a sense of disconnect from the goal of growing the value of the token, compounded by the reality of critical data looking bad, such as total Dai supply. The protocol is generating significant income, but all of that income is perceived to disappear into Core Units that operate at levels too complex for community members to understand and see results from.
The only value that is perceptible currently is the value provided by the core of the maker protocol, which is relatively limited, comprising the 6 most popular vault types and the PSM mechanism. Everything beyond has for the most part yet to generate value, but this is where the focus of most of the 115+ strong workforce is aimed. The workforce has now grown so big, that combined with the downturn in the markets and fading growth, it is not even possible for the core of Maker to sustain the workforce anymore, and the protocol has become unprofitable.
Meanwhile, it is very hard to see how the community can make a difference through the levers of governance because of how overwhelmingly complex and opaque Maker governance seems.
The Complexity Spiral is the phenomenom that Maker often feels as if it’s taking one step forward and two steps back, because problems that exist in governance are often caused by complexity, but to solve those problems requires creating more complexity, which means overall the problems get worse.
The relationship problem is the contradiction of Maker as a clunky, slow and single threaded decision making process where hundreds or even thousands of token holders from around the world have to coordinate and make decisions about hundreds of delicate relationships with individual humans, including core unit members and collateral counterparties who all have their own expectations. At scale this starts to become very problematic, and 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.
Finally Voter Apathy occurs because of these above problems, and is more generally just something that is inherent in organizations, since voting costs time (and in Maker even money) but gives no direct benefit in return.
Even with all of these issues Maker has an extremely valuable pool of talent driven by passion for the project, and while lots of problems exist they are mainly caused by the overarching dysfunctional structure rather than the people involved. This means that if we use MetaDAOs to deal with the problems and empower the value that exists, we can open a floodgate of value creation for MKR holders.
But the most important thing is that MKR holders have to take the initiative to change things, because voting power ultimately determines all incentives in the system, and lack of clarity about what MKR holders actually want is the most confusing factor across the DAO.
The Endgame Plan proposes to first start by organizing the top layer of governance by creating an environment where MKR holders are set up for successful decision making, making voting feel as easy and impactful as possible.
Step one is the creation of voter committees, where MKR holders come together openly to discuss direction and coordinate voting behaviour on upcoming proposals, as well as signal future voter support for an overall direction and individual proposals. Voter committees are aligned around a “direction” that informs how they vote for proposals and which delegates they support. Voter committees directly impact governance both by organizing votes on specific proposals, but also by rebalancing delegation votes to different delegates, creating a strong incentive for delegates to take initiative in support of the direction of the Voter Committee. Voter Committee participants are incentivized through a special compensation in the form of long term locked MKR tokens. This helps attract the right type of participants, and ensure they have clear incentive alignment with the outcomes of their decisions.
Step two is to elevate the roles of delegates and recognize they serve a purpose as critical as Facilitators, by matching the compensation of top Facilitators for the top group of delegates that are designated as “Executive Delegates”, giving them a generous MKR bonus as well as “soft job security”, meaning they can’t just lose their compensation from one day to another. But in addition to these perks, more clearly defined requirements must be placed on delegates, including attending voter committees x hours per week as a part of the full time job and a strict requirement to follow best practice that enforces principles such as full disclosure and separation of powers.
Step three is for the Voter committees and delegates to interface with Facilitators of the Core Units, in particular Supporting Core Units such as Sustainable Ecosystem Scaling and Strategic Finance, in order to generate a voter centric view of how the DAO is organized, and how it could be improved to better suit the objective making governance more accessible.
Step four is to also include external consultants and experts in order to validate and challenge the internal perspectives in the community, to avoid an echo chamber situation. By drawing on experts in organizational innovation we can ensure that the cornerstone of Maker’s DAO structure is built on a solid theoretical foundation that the community can confidently put their trust in.
The goal of the Decentralized Voter Committees is to make Maker governance more naturally decentralized, transparent and diverse. By having multiple redundant DVCs that are clustered based on common values, called “Direction”, the voter committees help encourage diversity of opinion and make sure there is a valid platform for all major opinions. This minimises the risk that some perspectives can be labeled “incorrect”, even if that is not in the interest of MKR holders, such as currently it is very difficult to discuss reducing budgets.
A voter committee is controlled by an organizer, or a group of organizers, who can choose which MKR holders they invite to the voter committee. This allows them to exclude MKR holders if they don’t agree with the voter committee direction, instead forcing them to start their own voter committee with members that all align with the direction. This way, all directions can be discussed freely in constructive environments where participants in the discussion are collaboratively trying to further the agenda of the members.
To bootstrap the voter committees, we first need to develop the “World Map”, a complete global overview of how to subdivide the total scope of maker governance into logically consistent categories. This should be done collaboratively by including professional input from Core Units, and in particular from supporting core units such as Sustainable Ecosystem Scaling and Strategic Finance, whose job is to try to create overview and monitoring of the workforce.
Once there’s clarity about the World Map, MKR holders can begin to organize specialized Voter Committees that focus on individual Scope Maps. These specialized Voter Committees first focus on getting an overview of the field of specialization, and then on documenting the Scope Map. Using the Scope Map as the core framework they can then oversee progress within their area of specialization, and push for changes that better align with their direction.
Focus Objectives are a powerful tool that allows MKR holders to align on an overall set of priorities that draw on resources from multiple Scope Maps. The Focus Objectives represent the overall most impactful developments that the Core Units prioritize, following a “waterfall” approach where thigns are prioritized at the top of the list and resources can only flow to objectives that are lower on the list if higher ranked objectives have all their needs fulfilled. This allows for flexible and parallel development to the extent resources are available, while providing guarantees that high impact outcomes aren’t neglected.
Once Core Units have allocated all necessary resources to the Focus Objectives that are relevant to them, they can prioritize internally, and prepare for new focus objectives.
Focus Objectives can quickly change as market conditions or other external factors forces them to change. The best example is in the case of hacks or other critical risks, in which case mitigating the risk immediately takes the top spot as focus objective.
In order to allow Focus Objectives to rapidly change and be flexible enough to serve their intended purpose, they are created through offchain polling done at Voter Committees. A synthetic “global” list of Focus Objectives is created by adding together the MKR totals of different focus objective list from different voter committees, which enables minority MKR holders to also have an impact on the overall prioritization rather than being completely overruled by the MKR majority.
Ultimately, Core Units have freedom to interpret and follow the Focus Objectives in the way that they think will be best benefit the DAO, but failure to follow it must be monitored and documented by the Supporting Core Units including the reasons for not following the Focus Objectives. MKR holders can then use the data to make adjustments to Core Units, such as adjusting budgets, based on which Core Units are delivering the results that MKR holders want.
The current list on this slide represents the latest proposed “Genesis Focus Objectives list” that would come into effect at the Endgame Plan Launch and would then dynamically change from there. This list will be furthered altered based on input as the Endgame Plan Launch MIP is developed, and can already in this current stage be used as input by Core Units when planning and prioritizing. The line items marked as Endgame Plan will be further explained later in this document.
Part 2: Endgame Plan Launch
This section will focus on the near term features of the Endgame Plan and how it can be launched. All elements of the Endgame Plan launch are generally optimized to be low hanging fruit, requiring minimal effort but providing significant immediate value by tapping into value that already exists in the Maker Ecosystem, but is currently hidden. There are references in this section that introduce concepts that are only fully explained in the complete Endgame Plan document, so for now that detail is missing, but will come with the full version that will be released later this week.
The Endgame Plan revolves around deploying the extremely powerful tool of MetaDAOs to improve and empower Maker.
MetaDAOs build on top of the established concept of Pods/SubDAOs, that allow a DAO to gain a lot of desirable results that normally aren’t possible to get without making tradeoffs.
MetaDAOs allow for deep specialization by workforce, community and governance process because each MetaDAO can focus on their desired specialization, allowing them to devote the necessary resources and focus to become properly specialized, and not be distracted by other responsibilities. This is a much better situation than the current expectation that Maker has be able to specialized in a large amount of completely disjoint categories.
Right now Maker is significantly held back by it’s overwhelming and opaque complexity, but this complexity exists for good reason because complexity is necessary to take advantage of the best opportunities that exist in the market. MetaDAOs allow the Maker ecosystem to keep its complexity and even adopt orders of magnitudes greater complexity, but this would happen in isolated and derisked MetaDAOs, while the Maker Core could become a lot simpler than it is today, creating a best of both worlds situation.
MetaDAOs also allow Maker to overcome the single threaded nature of the current governance process, and let many separate MetaDAOs prioritize and execute in parallel with almost unlimited potential for scale and autonomy.
Each MetaDAO will operate with a fully self contained, tight feedback loop that ensures that all incentives are aligned between those who do the work and the results they create.
Finally MetaDAOs build on top of these fundamental, operational advantages, and also allow Maker to tap into the new generation of advantages offered by DeFi, tokens and blockchain ecosystems, including using token communities for growth hacking and building intangible value through art, events and identity.
The key characteristic of Maker MetaDAOs that makes them so powerful is that they are extremely easy, cheap and simple to create because they are able to build on top of the fully mature governance infrastructure of Maker, and only require simple primitives that already exist and are widely used across modern DeFi.
A MetaDAO is created when Maker deploys an ERC20 token that Maker Governance retains owernship of, and then generates some tokens to put in a treasury that’s also held by Maker Governance. Additional tokens are then generated and go towards community distribution, primarily towards Dai users, Maker Vault users and MKR governance participants.
This creates a fully decentralized community with a full fair launch starting condition, and this decentralized community than has full autonomy to make fundamental decisions for the newly born DAO, including determining a name and identity, hiring Core Units, and pursuing various profit generating activities (the profit opportunities available to MetaDAOs will be covered below in this document)
The MetaDAO token holders make their decisions through offchain polling, which makes it free and fast to do. Once the decisions are made, they are then included in the Maker Governance process and execution is bundled into a Maker executive vote. This way MetaDAOs can instantly have fully decentralized governance and a functional treasury, but have no risk of suffering governance attacks.
To help understand the basic value proposition of MetaDAOs and why they are useful to Maker, this is an overview of the 3 broad categories of MetaDAOs that the Endgame Plan proposes.
The first category, which is meant to be the most numerous, are the CreatorDAOs. They are an archetypical, generalized MetaDAO that fundamentally focus on innovation and experimentation, and using this to drive growth. CreatorDAOs have no restrictions on what they can do or become, and this makes them very flexible and potentially very heterogenous and different from each other. CreatorDAOs also have particular potential to tap into intangible value and metaverse trends.
The specialized MetaDAO categories exist to serve some specific needs that Maker has, that are complicated and challenging enough that it makes sense to have MetaDAOs specifically covering those categories.
GovernorDAOs exist to both professionalize and gamify the core governance processes and bureaucracy of Maker. By ensuring that there are multiple, redundant MetaDAOs specializing in this it becomes possible to provide guarantees around decentralization and diversification of core processes and political dynamics, as well as some useful specific methods for significantly derisking many common governance decisions related to the Decentralized Workforce that are currently a challenge for Maker Governance (This will be covered in detail in the section on the Decentralized Workforce below)
ReformerDAOs are specialized in dealing with the intense complexity of building the bridges between the decentralized world of DeFi, and the legal world of real world assets. It is right now proving to be the most challenging and disruptive problem for Maker governance that is harming the political dynamic, and it is clear that such an incredible complex challenge must be solved by streamlined organizations that have governance processes and cultural makeup specifically designed to deal with this challenge.
Launching the Endgame Plan and moving to a MetaDAO paradigm
The step by step process of ramping up the MetaDAOs begins by analyzing the risks that exist in the current organic structure. The biggest issue are all the hidden, complicated and often contradictory and conflicting relationships that exist across the DAO and between Maker Governance and hundreds of individual humans. The main objective of executing the Endgame Plan and bootstrapping the MetaDAO paradigm is to minimize the bridge burning and maintain as many high quality relationships as possible, while transitioning them to a form where they become realistically sustainable.
Before MetaDAOs are introduced, it is critical to first define what the Maker Core should be. The list above contains what’s currently proposed as the complete scope of the Maker Core, and the idea is that this Core definition should not change over time, but remain as static as possible in order to create certainty and clarity about what exactly Maker does and why it is secure and reliable. The only new addition to the Core is the ability to regularly incubate new MetaDAOs All additional innovation is instead pushed to the MetaDAOs.
A closer look at the core
Lets take a closer look at the Core, but from the perspective of a hypothetical “Rai-like” strategy that takes the opposite approach of the Endgame Plan. Instead of reorganizing and empowering the complexity that already exists, the “Rai-like Core” approach tries to just strip down all complexity as much as possible and create a maximally simple and autonomous stablecoin system.
This can be achieved by simply taking the functionality of the core, including ETH vaults, BTC vaults, aave and compound D3Ms, PSMs to the major centralized stablecoins, and then beyond this core add the ability to deploy collateral into US treasuries through a simple RWA setup.
Once this structure was created, it would require a minimal standing workforce to maintain, except for occasional upgrades or parameter changes to vaults that could be handled by external consultants rather than a standing, full time workforce. Critical infrastructure like Oracles would be outsourced to providers like Chainlink with one or more redundant fallbacks. Only voter committees and delegates would be required to continuously monitor the protocol to discover risks that need to be mitigated, which would for the most part be a very simple and minimally consuming task done at regular intervals.
All the value that is saved from not maintaining a massively complex workforce and peripheral products could then be used to just enhance efficiency of the system by setting a very high Dai Savings Rate, and it is likely that this hypothetical system would be very successful in the market due to its powerful core features, efficiency, simplicity and reliability.
However, if we extend this design with one more dimension of complexity by also adding the the core function of incubating MetaDAOs, the Maker Community can get all the benefits of this powerful, stand alone core, while also tapping into the infinite possibilities of long term DeFi innovation.
The first step to launching the first MetaDAO is a process called clustering. It involves identifying people, relationships, business opportunities, communities and technologies that have a natural synergy that can benefit from having a distinct governance structure and community. Once these different elements have clustered together, which in practice is done through a Maker Governance Proposal, the MetaDAO is ready for launch.
The first MetaDAO is then launched. The very first MetaDAO has some special considerations that must guide its design, due to its unique role of being the first time ever the concept is tested. For that reason it must be done as a low risk, proof concept that essentially acts as test run that have very clear validation milestones. This is well suited for a CreatorDAO that must prove itself by creating viral growth and ecosystem increase.
In the event that the first MetaDAO fails to deliver the expected results, the entire process can be reserved, and the plan can be aborted. This makes it a low risk bet that can be done step by step and easily walked back if the assumptions turn out to be mistaken.
First the very first MetaDAO a major challenge will be to attract workforce talent that is willing to make the jump into a new unknown structure. For that reason, Maker must provide very attractive benefits for those who pioneer taking the risk on this transition. This can be done by both continuing existing budgets and MKR bonuses and committing them to the new MetaDAO for a long term duration, and then on top of these existing benefits, the MetaDAO can also provide a significant MetaDAO token budget to the pioneers, creating an attractive risk/reward opportunity.
If the first MetaDAO is successful, then one by one additional MetaDAOs can be created, and these can now be structurally important MetaDAOs that help improve Maker Governance, including launching GovernorDAOs and CreatorDAOs that adopt critical resources and functions to derisk and improve them.
Once enough MetaDAOs have been created, only the Maker Core and MetaDAOs will remain. This new MetaDAO paradigm is very powerful and provides the best of both world where the core is immutable and resilient, while the MetaDAOs are fast moving, innovative and contain highly specialized complexity. CreatorDAOs in particular can also begin to innovate and experiment in directions that are less directly tied to the Maker Core, unleashing the power of autonomous and innovate communities.
Maker also will have no relationships other than a few predictable DAO2DAO relationships with the MetaDAOs and some key protocols such as D3M partners. All Core Units and other human relationships are intermediated by the MetaDAOs, ensuring Maker cannot fall into the relationship problem again.
M0 is the concept for the very first, low risk, proof of concept MetaDAO.
It is a CreatorDAO that focuses on pursuing profit opportunties that are external to Maker, or that adopt complexity Maker wants to get rid of, such as small vault types.
Deco Core Unit provides a well suited fundamental core value of M0
It is bootstrapped with the transition of the Deco Core Unit, receiving the budget currently allocated to Deco, and clustering with the Core Unit members. This can potentially also include resources and members of other Core Units that are aligned with the objectives of M0.
Frontend with stability fee revenue share
The Deco Core Unit already provides a perfect starting point for a strong and meaningful business model, as it both has frontend technology that the MetaDAO can use to provide a growth platform it can earn revenue share from stability fees it funnels to Maker - and this revenue share is affected by a very powerful feedback loop, since the vaults will have MetaDAO yield farming of M0 tokens, there will be a significant potential to earn cash, which will in turn make M0 tokens more valuable, further increasing the impact of the yield farming in a virtuous circle.
Fixed rates bonus feature
In addition to the baseline value proposition of providing a new frontend to Maker Vaults and earning revenue share from yield farming users, M0 can offer unique and advanced functionality by tapping into the primary product of the Deco Core Unit which is a tokenized fixed rate product, and this can be integrated directly into the M0 vault frontend, both creating opportunities for additional service fees and further increasing the potential for earning stability fee revenue share.
Oracle profit opportunities
Beyond the focus on a revenue share frontend with an integrated fixed rate product as a unique value proposition, M0 will focus on tapping into the other major hidden value proposition of the Maker ecosystem, which are the Maker oracle network. The most basic step will be that M0 “adopts” some of the existing Maker Oracle nodes. Adopting oracle nodes means to collateralize and take responsibility for the performance of the nodes, in return for a significant payment stream from Maker. This payment stream covers both budget that M0 can provide to the oracle nodes for them to upgrade their security processes and provide verification of their security, and also covers a “guarantee premium” that goes directly to M0 as profits. In return for this payment stream, Maker will now have a results claim against M0, and will be able to extract collateral from M0 in the event that there is outage, security issues, technical failure, oracle attacks etc caused by the oracle nodes adopted by M0.
Additionally, M0 will be able to tap into a new token for the Maker Node Network, which is an evolution of the Oracle network. This token is meant to be yield farming to MetaDAO token holders, and M0 will be the first MetaDAO that can take advantage of this. The full details of the Maker Node Network and $MANO token are explained in the complete Endgame Plan document.
D3M value generation through adopted vaults
A key long term value proposition of all CreatorDAOs is that they will run their own “mini-versions” of the Maker Vault Engine that will act as a lending engine for the MetaDAOs, and will be specifically optimized for Maker to tap into through a D3M construct. This way CreatorDAOs can provide a simple and powerful way for Maker to outsource the onboarding of long tail collateral that is not suitable for Maker Core, but is still a good business opportunity.
Such a MetaDAO Lending Engine will not be availabe for a long time, but before it becomes availabe it is still possible to simulate the same interaction through a MIP and governance regulated system whereby the MetaDAO adopts vaults in the main Maker Vault Engine. Maker Governance will specify all of the small scale vaults that fall below its minimum criteria for Maker Core vaults. M0 governance will then have the opportunity to adopt any of these vaults that it wants. When M0 adopts a Maker Vault, Maker will only earn a baseline, low stability fee on the vaults, while the MetaDAO earns all stability fees above this baseline (plus any frontend revenue share income, if applicable). However in return the MetaDAO will be collateralizing the risk of these adopted vaults, with maker extracting collateral from the MetaDAO to cover any losses it incurs from the adopted vaults. M0 will also be responsible for all oracle costs related to the adopted vaults. M0 will have complete freedom to adjust risk parameters (within some global bounds, including a maximum line of credit that is equivalent to the risk paramters of a D3M). M0 will also have the freedom to migrate the vaults to lower cost oracle providers such as chainlink, but assumes all risk of doing so and must do all the work itself, through it’s internal resources and governance process.
Once the MetaDAO Lending Engine technology is ready, all adopted vaults are then transitioned to it.
Develop unique metaverse identity
M0 will be the first opportunity for a new, born-decentralized community to develop a completely unique, decentralized identity, that can potentially create additional intangible value for its community members, and also synergize with the frontend product by providing a unique brand that is optimized for attracting users. Once enough tokens have been distributed and the community has started to crystallize, the community can internally organize a process for picking a new name and token ticker.
M0 will not operate any Maker Core Units and Maker will have no dependency on M0
Since M0 is the first MetaDAO, it is uniquely designed to be reversible, meaning that it can be relatively easily unwound if the concept turns out to not deliver the kind of growth and momentum expected. It is also important to note that any Core Unit members that join M0, including the Deco Core Unit members will not be “adopted” by M0 (meaning they will not continue to work as Maker Core Unit but managed and with results guarantee from M0, which is a functionality other MetaDAOs can have). Instead they will fully join the MetaDAO and become internal Core Units of the MetaDAO. This means they take more risk, but also get higher rewards in the form of more MetaDAO tokens and more direct exposure to the result of their own work. Additionally, as an incentive for them to take the pioneering risk, Maker will provide M0 with the resources that would otherwise have gone towards the Core Units that switch to becoming internal MetaDAO core units. So the MetaDAO will have plenty of cash and even MKR to make sure that anyone who makes the switch will get a significant raise as a result of the additional risk and leadership responsibility they take.
The lowest hanging fruit of the Endgame Plan Launch is the acceleration of the existing roadmap milestone to quickly launch a simplified version of Synthetic ETH. Maker has always planned to eventually develop synthetic assets for other targets than just Dai, including both other currencies but also volatile assets like ETH.
Synthetic ETH is a uniquely powerful product that synergizes especially well with the coming Merge, as synthetic ETH serves a usecase inbetween native ETH and Staked ETH tokens, by both offering very high liquidity but also exposure to ETH staking rates.
It is possible to very quickly bootstrap a fully functional synthetic ETH simply by creating a simple wrapper around a liquid staking token, such as Lido Staked ETH (or possibly a smaller Staked ETH product if Lido starts to throttle its yield, even though that is less ideal)
Maker Governance then retains full authority over this simple Staked ETH wrapper, and can later upgrade it to a fully fledged Synthetic Asset once the technology is available, the minting rights for the Staked ETH wrapper to the vault engine of the Synthetic Asset and transferring all the collateral from the wrapper into a PSM in the Synthetic Asset.
MATH may be the first Endgame Product that should be released, since it can be a powerful standalone product even before M0 token yield farming begins, since it can be initially growth hacked by giving it a 0% stability fee, building up a user base in advance of the M0 farming.
M0 tokens, initially denoted $MZR until the community chooses a new name, will be distributed through fair launch yield farming with no insider allocations, in order to maximize benefit to the broader Maker Ecosystem and create a community that decentralized from scratch.
This includes MZR farm for Dai holders, which provides Dai holders an alternative to earning DSR. This way distributing the free MZR tokens still provides Maker a benefit, since it will be cheaper for Maker to offer a high DSR since many users will not use it, and instead choose the MZR farm.
The planned main target of MZR yield farming rewards are MATH vaults, specifically debt of MATH Vaults. This helps provide a massive incentive for Dai to be backed by more decentralized ETH as collateral, reducing the stablecoin ratio and increasing decentralization of the system. Maker also has the ability to earn cash in return for the free MZR token that are farmed out, because Maker can charge a stability fee on the MATH vault debt. The stability fee for vaults used for farming could be dynamically increased to capture some of the value of the free MZR tokens, by for instance setting it to its base rate + 20% of the APY provided by the MZR farm. This creates significant value preservation as Maker is able to turn tokens into cash, and this boosted cash flow allows Maker to easily fund many of the new expenses introduced by the Endgame Plan, such as Stability Fee revenue share and adoption guarantee premiums for oracle nodes.
Finally an important role of the MZR farming plan is to provide a powerful incentive for MKR holders to delegate their votes. As soon as it becomes possible to earn free MZR tokens by delegating MKR, there will be a massive burst in active delegation. Many of these votes will be intelligent and thoughtful voters, but many of them will also be users that just pick a random delegate in order to farm the MZR tokens. This is why it is extremely important to first solidify Maker Governance and put proper checks and balances in place around delegates, so it will be safe to unleash delegation incentives at the launch of M0.
How MetaDAOs help solve the difficult problems
The Endgame Plan is designed to be a snowball that is released from a hilltop. As it starts to pick up speed and MetaDAOs are created, the incentives that drive the MetaDAOs will then lead them towards building out the pre-determined Endgame State where the Maker Core has clearly defined, powerful but simple features, and then has the ability to incubate MetaDAOs and let them be responsible for any further innovation.
Benefits of the Endgame Plan
The complete Endgame Plan document contains all the details of what this end state looks like, and how the incentives that drive the workforce, the MetaDAOs and Maker Governance reliably towards that end state. This includes powerful product designs for things such as the Singularity Engine tokenomics and vault engine, the Elixir wars tokenomics synergy, the $MANO token for Maker’s oracle and staking network, the MetaShard Maker rollup, synthetic assets, and other powerful features. Below are some of the outcomes listed in TL;DR format to help summarize all the benefits the Endgame Plan provides to the project
The complete Endgame Plan will be released later this week.
right here! I don’t think folks understand what the Synthetix community has quietly built via Optimism, and now the SNX token holders are being rewarded. Was it painful? For sure! But as the saying goes, no pain no gain. Upwards and onwards!