Interview: Jack, BlockBeats

Organized by: Sharon, Luccy, BlockBeats

Editor: Jaleel, BlockBeats

Since the Escape from Ethereum, there has been endless discussion about MakerDAO.

Maker is the oldest DAO. MakerDAOs annual revenue is $142 million+ and its project expenditure is $44 million+. At this scale, MakerDAO has struggled with coordination issues for years.

In order to solve the governance problems in the MakerDAO ecosystem, this established DeFi project announced that it would adopt the Endgame project. During this period, a number of VCs including a16z were dissatisfied and sold all their tokens.

On September 1st, Rune Christensen, the founder of MakerDAO, published an article Exploring branches of the Solana code base for NewChain, which instantly caused an uproar. The founder of Ethereum, Vitalik, sold 500 MKR worth approximately US$581,000 the next day and After exchanging it for 350 ETH, voices about MakerDAO escaping from Ethereum and offending Vitalik were rampant.

There are many speculations in the crypto community about the future direction of MakerDAO.

Today, during the TOKEN 2049 conference in Singapore, BlockBeats exclusively interviewed MakerDAO founder Rune Christensen. We can find out some of the stories behind MakerDAO’s governance and public chain disputes.

With Endgame, MakerDAO seems to have found the answer

On August 7, MakerDAO co-founder Rune introduced on Twitter the upgrade of DAI and MKR to a unified brand. The temporary code names are: NewStable (NST) and NewGovToken (NGT), as well as all key elements of Maker Endgame.

Endgame is the actual implementation of Alignment Engineering for the Maker ecosystem, which will develop the ecosystem in four main areas in the short term. Each will be phased in over about a year. Previously Dai and Makers brands were separate, as were their user bases. MakerDAO hopes to change this with a new unified brand that will bring more consistency between users and governance.

The most critical of which is this: DAI and MKR are here to stay! Upgrading is an option. The new unified brand will focus on making it as easy as possible for people to start using stablecoin products, DAOs, or both.

The temporary code names are: NewStable (NST) and NewGovToken (NGT). The revaluation for upgrading MKR to NGT is 1:12000. NST will be able to mine NGT tokens.

In addition, subDAO is undoubtedly the biggest feature of Endgame. After all, one problem that no cryptocurrency project can escape is community governance. MakerDAO obviously has a deep understanding and experience regarding this issue. Rune believes that in order to deeply manage the community, we must reduce complexity into simplicity and split the large and complex system into various subsystems. The goal of Endgames birth is obviously for this purpose.

Related Reading:Merging Dai and Mkr users: MakerDAO’s rebranding after Dai deposit interest rate rises to 8%》

Avoid MakerDAO governance falling into two extreme ways out

BlockBeats: Many venture investors, including Vitalik, disagree with Endgames vision. And in the past few months, have you continued to buy MKR to show confidence to the outside world? What are your thoughts on Endgame?

Rune：There used to be a lot of large MKR holders in our ecosystem that did some institutional level transactions with the foundation years ago, and I think their motivation was really based on the basic way investors work, which is to get good deals Then exit. But now we have a new group of institutional MKR holders who are completely trading the market, which is a completely different situation and who are true believers in the system.

Generally speaking, they buy MKR because they understand the end goal to some extent, which makes me really happy because I was initially disappointed with cryptocurrency investors. But I think these new institutional supporters now show a different side. They are people who believe in technology and the possibilities of the future. We need to pursue that sweet spot that can produce some meaningful and valuable value for the real world, that is, the combination of decentralization and blockchain technology with the real world.

This union exists within reality, not beyond it, and must therefore be shaped and adjusted to fit reality. More and more cryptocurrency holders, enthusiasts, and contributors are realizing this, and it’s hard to succeed if you go to either extreme.

BlockBeats: A problem faced by almost all DAOs today is that there are large positions among the top VC firms, but when it comes to voting, is it the community or the top VC firms that controls? MakerDAO also experienced this problem. Do you think MakerDAO governance is bound to fall into these two extremes, where either the VCs control everything or the founding team controls everything?

Rune：I think both scenarios are unlikely to succeed, and basically most cryptocurrencies right now dont. This problem is particularly acute when it comes to governance, where almost all we see are completely broken. Even if projects like MakerDAO are less disrupted than elsewhere, the way the entire system works needs profound reform.

This is the core idea of ​​Endgame, that the only way to solve governance problems is to simplify. You need to make it simple enough to ensure that decisions are made the way they should be. Endgame’s approach is to rebuild the fundamental processes of governance and then reshape the entire ecosystem on that basis so that they fit together so that the governance process is strong enough and the broader ecosystem and decisions that need to be made are simple enough.

These two can be combined in reality and eventually become a paradigm, which is the users, the ecosystem, the community, the people who actually make the decisions. While ideally they dont need to make decisions at all, if you really want to eliminate controversy, politics wont work in a large DAO environment. The key to eliminating controversy in Endgame is to record everything.

This is a pattern where, as long as the system is simple enough, we can try to make all decisions in advance because there are fewer variables. You need to make decisions ahead of time so that you don’t run into problems like contributors not completing their work. You want to make decisions ahead of time based on hypothetical situations, rather than specific people or things. Because theres this whole political world that can influence decisions in a split second if specific people are involved, but if you set the rules in advance, you can apply them fairly.

Another key point, and this may be a key factor in making Endgame successful, is that we simplify the ecosystem through subDAO. We took our currently large, complex, and overwhelming core system and split it up to find answers for every possible what-if decision. Become simpler, the core system only needs to set the boundaries around the subDAO without having to understand and micromanage them, thereby eliminating 90% or even 99% of the complexity.

subDAO makes it easier to integrate regional culture

BlockBeats: Regarding subDAOs, someone mentioned the point that it may be difficult for these subDAOs to survive or prosper because they have to be responsible for the core of DAI and Maker, while also finding their own market positioning and developing their own applications. Will this be very difficult for subDAO?

Rune：subDAO is actually competing for something similar to air, because the entire industry has almost no value. Its almost embarrassing to look back at the last bull market and for all the hopes and dreams, so few actually made anything of substance. Cryptocurrency has a lot of potential, but this potential depends on it redefining money, but it evolved into a money problem, which led to the emergence of scammers, and then the entire industry fell into bubbles, leeks, scams and huge The whirlpool of scams eventually reaps its own consequences.

The key to subDAOs is that they leverage Makers superpowers, which are patience, practical technical and economic skills, and the ability to do real things. The most important thing is that our corporate culture is not about making quick money, but about building a long-term big business, which has greater potential and value than any dirty, quick-cut leek token.

So from the beginning, subDAO combined the flexibility of a startup without the constraints of the massive scale and complexity of Maker Core, so they had a lot of room to innovate. We have the best developers and teams who are working on these problems, and we also receive huge financial support from the company.

So even when subDAO was still in the hypothetical stage, it was clear to me that subDAO was the future. I think any project that wants to succeed in this space and have the opportunity to scale will adopt some version of the subDAO model. If there is no separate management from the beginning, being a DAO can only scale to a certain extent, or it can only become a company, thereby giving up the entire decentralization and governance. Now that we have further developed, we have shaped the DAO based on signals from the market and the community. We found that subDAO is very good at interacting with communities in various regions, such as Sakura DAO, a subDAO that interacts with Japanese communities. It took off very quickly in the Japanese community, and people saw that this was a way to interact with Maker, take advantage of what Maker had to offer, and we could also function in a more familiar environment.

For example, Spark is more focused on innovation and construction. The Korean community found that they could build and interact here; we found that people in Singapore and Southeast Asia were not interested in games and innovation, but wanted to make real assets, so we established a subDAO focusing on physical assets and private credit in Southeast Asia. Finding the best real asset deals cant be done without a personal, on-the-ground investigation.

The truth is not everyone wants to do everything, most people are only interested in a particular area. In the past, to do the fields you wanted to do in Maker, you had to deal with a whole set of tasks; with subDAO, people can focus on the fields they are interested in. People who like deep technology and deep innovation fields do not need to deal with physical assets, and vice versa. Likewise. People interested in finance dont like ambiguity, and everyone is more satisfied, which leads to higher productivity, more innovation, further reducing the struggle for governance, more focus on construction, and Things are brought to market.

BlockBeats: Many people believe that creating subDAOs may bring more costs because more people are needed to manage these subDAOs, and you also introduced AI governance tools. Did you ever consider that maybe this would create more costs on the human resources side, or create more tensions on the governance side?

Rune：This is all based on a principle called alignment engineering, that is, every aspect of the system needs to contribute to simplicity, reducing conflicts and complexity, and reducing information loss. The reason subDAOs make things so much easier is because they can fail. So if a subDAO wants to create something dramatic, stupid, or create a lot of conflicts, they can indeed do it, and it will be acceptable to the entire ecosystem because their failure will not affect the stability of DAI. sexual or other problems.

BlockBeats: But they do increase the cost, right?

Rune：Yes, the key is to imagine a single interconnected system and you discover that some part of the system is malfunctioning or has a structural risk that you cannot easily control. At this time, it is possible that the entire system will collapse. In the case of subDAO, we can limit this problem to one subDAO. If you think about it from this perspective, you cant imagine how much cost this kind of failure will cause if it is placed in an overall system.

But if it is a subDAO, we can know how much we have subsidized and how much value we have invested. When we make this decision, we decide in advance the cost of failure that we are willing to accept, and we are actively risk managing, knowing that we are risking losing that money. It doesn’t matter if you fail, after all even failure creates value because understanding the ways things can go wrong is incredibly valuable data.

In a complex interconnected DAO, you cant reasonably do these kinds of calculations and say, Were taking some risks and maybe crashing the whole system, but were going to get some good data. You dont have that confidence; You can only say: We cannot let the core fail. Because the core is very different from subDAO. The core is the stable fulcrum of DAO. When youre doing stablepoint versus building on top of a dynamic DAO based on stablepoint, the level of assurance you need to make sure things wont fail is completely different.

After Escape from Ethereum: Solana is only one of the options

The words Escape from Ethereum are at the core of the controversy caused by MakerDAO in recent times. In a blog post, Rune detailed MakerDAOs long-term plans to reimplement the project, proposing the creation of a new chain using Solanas codebase. Rune also listed three reasons why he believes the Solana codebase is the most promising for NewChain to explore, including the technical quality and optimization of the Solana codebase, the resiliency of the Solana ecosystem after the FTX outbreak and the past examples of successful Solana forks. of.

Rune proposed a possible future in which MakerDAO’s NewChain would serve as a secure bridge between Ethereum and Solana, “providing a beneficial boost to the network effects of the entire multi-chain economy.”

In this exclusive interview, Rune expressed that MakerDAO is planning to make more effective attempts to find the highest performance public chain to help various systems in the MakerDAO ecosystem interact better. Solana is not necessarily the best for MakerDAO. Excellent and final choice.

What underlying technology does MakerDAO need?

BlockBeats: Regarding NewChain, why did you choose Solana instead of Ethereum? You mentioned that Maker has a special front end that is more suitable for Solanas code stack, why not a chain like Aptos or a programming language like Sway? What are the specific backend requirements for Maker? Why is forking necessary?

Rune：First and foremost, Maker is highly focused on Ethereum. We have five Ethereum-focused development companies in the ecosystem, and Maker will fund, transact, and incubate. The number of developers focused on Ethereum and EVM will only increase, and will only increase, because Ethereum, EVM, Layer 2 will be where all users choose.

So thats where we build our user-facing products. But the key to making subsystems really work, to take them to new heights, to demonstrate the true potential of blockchain, is that they have very advanced token economies inspired by a lot of what was happening during the DeFi boom , not only will it not collapse, but it will also be sustainable.

There is a token economic interaction between sub-agents similar to Curve and Vaults, which can both compete and collaborate. The problem is that this involves exchanging and distributing a large number of tokens, and if not done on an efficient backend, it will be an attack on the system and will have a negative impact on what we build on Ethereum and provide to our users. . So we wanted to find a high-performance stack to build this backend on.

We wanted to do some experiments with Solana since it has proven its high performance in real life. But obviously, what we need is the best technology, but we need to take time to choose. We cannot choose Ethereum or Solana just because we have been very consistent with Ethereum or because Solana is the latest trend. We need to really try, study, and learn, and that takes many years.

For Ethereum and EVM, we will conduct experiments and research to understand the actual situation, and maybe the results will show that EVM is the most efficient way to build things. Currently, my impression is that the EVM is like Javascript, its a standardized thing and everyone knows how to use it. So if you understand how the internet works, those are the things you use to handle all front ends.

But you cant use JavaScript to build a high-performance backend, otherwise the front-end will become worse. So you dont see extremists like JavaScript saying, You have to build the backend in JavaScript. In fact, EVM and Ethereum and its ecosystem and Layer 2 would be better if products based on EVM had these specializations A specialized high-performance backend will benefit users and develop the ecosystem.

Were going to show everyone: Look, theres real value here. We just need to build, not fight, and I hope the launch of sub-tokens can really kickstart that. We’re going back to DeFi summer, but this time it won’t end, but will continue to evolve with sub-coins, and it won’t be a bunch of Ponzi schemes, hype and dumps. Its going to be actual valuable tokens that have real use cases, real specialized business models, and theyre going to have this community adaptability from the get-go.

BlockBeats: Is that the same idea with T-Bills and the whole RWA thing that you guys are building?

Rune：Those will all be run by subDAO.

BlockBeats: So Solana is not the final choice, and it may be replaced by another chain?

Rune：Of course, this is just a try so we can learn. We also need to look at other aspects and see what the performance is like and the developer ecosystem around it in order to really make the ecosystem more efficient in three years to benefit the entire industry and promote the development of the entire ecosystem. Ethereum, including Ethereum, is obviously an area of ​​focus for us, where our users are and where our developers are focused.

Rune’s new company: looking for an interface and balance with the real world

BlockBeats: You mentioned that the front end of MakerDAO may not include American users. Is this detrimental to the large-scale popularity of Maker?

Rune：If you want mass adoption, you need to deal with real people in the real world. The existence of cryptocurrencies does not mean you are immune to laws and regulations. This has been one of our key principles over the past eight years: we need to work with regulators to make sure we dont do things that could end up causing more problems and uncertainty for users. Thats our whole philosophy, we try to find a balance between DeFi and the real world and apply it in a way that really works.

BlockBeats: Many people choose to cooperate with large institutions. Why did you choose to set up another company?

Rune：Yes, we have currently created two companies and call them arrangers. The reason why we work with more crypto-native companies is because they are crypto-native because it is not difficult to find lawyers who can do the job, but it is very difficult to find someone who understands both the crypto space and the legal and business aspects.

We were basically the trailblazers, showing the outside world how to do this the right way. Because most projects working on on-chain assets and RWA do not understand what projects like Maker are actually looking for, what kind of risks and legal certainty are involved. Most products and projects doing asset tokenization and RWA are engineer-driven, with one person coming up with a good idea and then thinking about implementing their idea without focusing on what users actually need.

And whats really cool about the subDAO model is that it gives subDAO a lot more flexibility in figuring this out, rather than figuring everything out from top to bottom like MakerDAO does, it just sets the ballpark of what we care about. boundary. The subDAO then addresses complex legal and regulatory issues by having a community of token holders who have a special interest in governing these issues.

A lot of people in the crypto space dont want to do these things because theyre so complex, they actually want to deal with something like the metaverse. Therefore, the subDAO model is very suitable for bringing the right people together to make the whole system very flexible. Having the tools, skills and mentality to maintain our absolute leading position in real assets is one of our great advantages.