MakerDAO is one of the most intriguing projects to watch in the cryptocurrency space in 2020 and beyond, namely because of how interesting things can get around the Maker ecosystem going forward. That is, if you’re into experimental economics and politics.
Let’s dig a little into the latter, what a Maker political scene might look in the future, to analyze where things might be going for the rising decentralized world currency effort.
None of what follows is investment advice to be sure, but it certainly is political speculation.
Maker Ascending, Attention Ascending
The Bitcoin Dominance Rate, or how much of bitcoin’s market capitalization accounts for the entire market cap of the cryptoeconomy, is a closely watched metric not only among Bitcoiners but also throughout the cryptocurrency ecosystem.
In kind, one of the closest watched metrics in the Ethereum decentralized finance community, or DeFi for short, is the similarly construed Maker Dominance Rate — the tracking of which is a hallmark of the popular DeFi Pulse analytics portal, for example.
Why measure things against Maker, then?
Because MakerDAO — the young “decentralized credit” project behind the Dai and the stablecoin’s associated governance token, MKR — has been the smashing hit of DeFi to date, like how bitcoin in a larger sense has been the smashing hit of the cryptoeconomy to date.
The future is long, and maybe one day Maker will get overtaken by another popular dApp. But at the moment, Maker is by far the bellwether project and the keystone “money lego” of DeFi in terms of adoption, and it has been since the DeFi’s inception. It has more room to grow too, clearly.
This is all to say that the growing clout of Maker makes an increasingly active political scene around the project seem all but inevitable.
A New Kind of Politics Is Coming
As the Maker project matures and its Dai stablecoin becomes more popular, the specter of governance in the Maker ecosystem rises accordingly.
Mind you, MKR is the scarce, deflationary governance token of the project. Dai users who have taken out automated Dai loans from Maker Vaults can close out these positions by paying MKR to cover the “stability fee,” or interest, they’ve accrued.
Yet equally importantly is how MKR is a governance token, which stakeholders throughout the Dai ecosystem can use to vote on a rolling basis on key technical matters pertaining to the stablecoin and the Maker protocol.
In 2019, considerable developments around governance infrastructure — like Coinbase Custody and Anchorage activating support for MKR votes — put MKR voting under the microscope like never before.
This growing focus on MKR votes has led to community discussions on the advent of protocol politicians, who could be delegated votes from other users — or even whole factions — for supporting specific policy positions. For now no such delegation is possible, but it’s undoubtedly coming, and perhaps soon.
So what’s the big idea? If Maker eventually becomes an even bigger and more successful project, the stakes around its politics, and thus its political arena in general, should also swell.
Glimpse of the Future?
Ryan Sean Adams, maestro of the Bankless newsletter, wrote an interesting primer on these coming Maker politicos in October 2019. In teasing some related possibilities, Adams hailed how he and RealT’s David Hoffman had recently played out competing mock political platforms on Twitter.
In the scenario, Adams supported an ETH-centric vision for Maker and vowed to vote against approving permissioned assets as collateral for Vaults, as such assets introduce trust implications in an otherwise trustless system.
On the flip side, Hoffman maintained he would back permissioned assets in Maker albeit with higher stability fees charged to compensate for the increased risks.
The illuminating albeit hypothetical exchange was just a taste of what could be coming in the arena, so what other possibilities might be on the horizon?
Speculating on the Factions to Come
As vote delegation hits the Maker scene, look for governance votes to potentially become more like elections, with different parties or factions arising around different causes under Maker’s Big Decentralized Tent.
Taking the aforementioned example of RSA vs. David Hoffman, in the future either could campaign on their respective platforms and “win” over delegated votes from like-minded peers. And others can and undoubtedly will do the same later for causes unknown to us now.
As this is all still relatively uncharted territory, what might some of these coming politicos look like? Below are a few stabs in the dark, with the following speculative figures named in a purely playful manner to bring the points across. Surely if Maker politicians really do come later, their campaigns will organically arrive at different wordings.
1) Tribunes of the Plebs
This speculative Maker politician takes it name from the ancient Roman political position, whose holders represented the plebeians, i.e. non-elites. Tribunes could use special vetoes to block actions of the Roman Senate, which was fielded by wealthy landowners.
In other words, Tribunes were incredibly powerful in a unique populist way, and the development of their position is a most interesting wrinkle in the history books of world politics.
That said, so too might a “Tribune of the Plebs” figure (or figures) eventually rise as a check on plutocratic power — i.e. whale voters with lots of MKR — in the Maker ecosystem.
Indeed, a protocol politician Tribune could vote in MKR governance matters with a focus on the interests of average, non-whale Maker Vault users. How these interests would be decided remains to be seen, though a decentralized autonomous organization (DAO) would be one possibility. Such a politician could collect community concerns from average users and organize community efforts around these vested interests.
Next up in our speculative list are Cosmopolitans. Cosmopolitans would be laser-focused on helping the Dai stablecoin become a major world currency, with all the implications that that rise would come with, not least among these being to ensure anyone, anywhere, anytime has access to reliable digital currency.
As such, the broad platform position for these politicians would naturally be supporting Dai use by a broad range of people around the world.
As for nitty-gritty policy stuff, a Cosmopol would vote toward a less restrictive bankless Maker system, e.g. no Know Your Customer (KYC) measures will be caked into the protocol on their watch.
It was a hard choice here between “Techniks” and “Contians,” the latter being both a sonorous reference to philosophical Kantians and a direct reference to Mariano Conti, Maker’s Head of Smart Contracts and thus one of project’s brightest technical minds.
Technik won out because it’s more universally apparent as to what it means: such a figure puts technical concerns first and foremost as a voter, so that the ultimate well-being of the wider Maker project is the main concern over all others.
For example, a Technik would back temporarily high stability fees (to the chagrin of borrowers) if such fees were thought necessary to restore the Dai’s $1 USD peg. We’ve seen such chatter before, namely when the Dai stability fee acutely climbed over the painful 20 percent mark in the first half of 2019.
Some borrowers thought that rate was scandalous; others argued it was necessary to restore the Dai’s then-struggling peg to $1. In the end, the battle for the peg was won, and anachronistically speaking we know exactly how a Technik would’ve argued amid that struggle: god save the peg!
4) ETH Maximalists
This one is straightforward. An ETH maximalist politico would vote in Maker governance affairs with a mind toward whatever they and their backers concluded would be maximally best for ether, the second largest crypto by market cap and the native asset of Ethereum, the blockchain that serves as the foundation for Maker’s (and the vast majority of DeFi’s) smart contracts infrastructure.
Last November, the MakerDAO ecosystem launched the Multi-Collateral Dai (MCD) upgrade, which thereafter allowed users to open up automated Maker Vaults using collateral beyond just ether.
The first non-ETH asset approved by MKR voters was Basic Attention Token (BAT), and more tokens will surely be voted in going forward.
With that said, some people in the future will undoubtedly take a “the more, the merrier” approach to new collateral types being added to MCD. These people might rally as Collateralists, backing a figurehead who would put their votes to approving most any new assets put up for the MCD.
Things are set to get increasingly political around Maker in the years ahead with the arrival of vote delegating and as the stakes of governance votes grow with more money on the line.
Perhaps politicians entirely different from the ones envisioned in this article will actualize. But it does seem clear that these politicos, in whatever shape or form they come, will actualize.
So if you’re big into DeFi already, bear in mind you will likely have to employ an increasingly civic stance as the space continues to mature.