Introduction
Endgame is a comprehensive governance overhaul for MakerDAO that addresses key opportunities and challenges faced by the blockchain industry. It aims to make Maker Governance more efficient, transparent, and inclusive by establishing a resilient and reliable governance equilibrium. To complement this increased resilience, Endgame also catalyzes scalable and parallelizable product innovation and growth strategies.
This post provides a quick overview of the 3 main features of Endgame, and gives a rough timeline for when they will be implemented.
1: Clear and Specific Rules
To be implemented immediately upon passing the Maker Constitution MIP Set
The Maker Constitution and Scope Frameworks serve as rulebooks that clarify roles, responsibilities, and decision-making pipelines. These frameworks reduce ambiguity and align DAO efforts towards critical objectives while ensuring that distractions are avoided. Easy-to-use software tools, such as data dashboards and AI chatbots, make the rules, processes and their results accessible and auditable for all governance participants, not just insiders.
The core rules and definitions of the Maker Constitution are immutable in order to provide minority token holder protections and to prevent scope creep or changes to the balance of power that might put the decentralization of the system at risk. This does not go into effect until all 3 core features of Endgame have been implemented, so early fine tuning of the core rules is still possible.
Constitutional Voter Committees (CVCs) are open structures composed of regular MKR token holders that are defined in the Maker Constitution. CVCs provide a public platform for MKR holders to receive detailed status reports and professional advice. Based on this input CVCs propose key decisions in a holistic format known as Governance Strategies.
A crucial aspect of the Maker Constitution is its focus on purpose beyond monetary enrichment, primarily through the Purpose Fund that allocates donations to charities scaling with MakerDAO’s success. This alignment encourages participants to seek long-term, holistic value from MakerDAO’s broad success, rather than narrow and short-term wealth extraction.
2: Governance Participation Incentives
To be implemented later in 2023
The Sagittarius Engine (SE) encourages MKR holders to participate in governance by locking up MKR and delegating their voting power to a Governance Strategy designed by the CVCs. This process utilizes a user-friendly, gamified frontend for easy access, and is comparable to the well understood process of picking a political party in a multi-party democracy (with voting power weighted by MKR holdings).
SE users receive compensation for their work in improving and securing Maker Governance in the form of Dai (25% of Maker Protocol surplus) or SubDAO tokens (SubDAOs are described below). The SE imposes a 15% exit fee, which is burned from the locked MKR when a user exits, incentivizing long-term commitment and problem-solving through governance tools like CVCs, instead of just quitting when challenges emerge.
3: Move operational complexity from MakerDAO into SubDAOs
To be implemented in 2024
SubDAOs function as semi-independent specialized divisions within MakerDAO. They have their own governance tokens and governance processes, enabling rapid parallelized growth, specialization and decision making. Outsourcing day to day complexity to SubDAOs significantly reduces the amount of work and complexity that Maker Governance needs to deal with.
The primary tasks of SubDAOs include maintaining decentralized frontends, allocating Dai collateral, handling operational efficiency risk, marginal decision-making, and experimenting with innovative products and growth strategies. SubDAOs reuse key governance processes and tools from MakerDAO to streamline their operations.
In Endgame, Maker will slowly move towards no longer maintaining native vaults. Instead, SubDAOs will generate Dai in bulk from the Maker Protocol at a low Base Rate Stability Fee, and then allocate the Dai to other DeFi protocols, Real World Assets, or their own native vault engines. SubDAOs cover all collateral onboarding costs, oracles, maintenance, upgrades, legal costs, credit risk assessment costs, and other associated expenses. They also maintain junior capital that takes the first loss on all collateral exposure. In return, SubDAOs can charge a spread above the Base Rate for their work and risks. Maker Governance can remove almost all costs and complexity related to day to day operations, and focus solely on mitigating tail risk and asset-liability management.
SubDAO and MKR token holders’ incentives are aligned through intertwined economic mechanics of their governance tokens. SubDAO tokens are algorithmically created and distributed broadly to Maker Protocol users, fostering decentralization and diverse communities. This fundamental decentralization, combined with broad token distribution, enables each SubDAO to find its unique specialization through organic, bottom-up processes.