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PaperImperium, a MakerDAO delegate and member of GFX Labs, caught lots of attention from the crypto Twitter community with his tweets today. He shared a part of the Maker Endgame Documentation, which is a set of proposals created by Maker co-founder Rune Christensen. It said, “$MKR may now be used to borrow $DAI by holders that have delegated their governance power to a Delegate.”
"It's devastatingly disappointing to see MakerDAO's co-founder pushing this plan. It's as if nothing was learned this cycle." PaperImperium said. He further explained, "if you get a liquidation spiral, it is the tokens in governance are leaving, so as $MKR gets cheaper, there's less to guard against malicious proposals. Good way to let Lazarus (cybercrime group from North Korea) or even an Avi (Mango Markets attakcer) steal all the user collateral."
The tweets raised concerns within the crypto Twitter community, with many crypto insiders joining the discussion. Arthur Hayes, co-founder of BitMEX, drew a comparison between $UST and $DAI. "Hmm looks a lot like backing $UST with its governance token $LUNA. Did Do Kwon secretly infiltrate MakerDAO?"
DeFi researcher Chris Blec held the similar idea, "bribing people to delegate is a bad idea. So is turning $MKR into $LUNA." Euler Labs CEO Michael Bentley directly said, "$EUL will never be a collateral asset. I don't think it's right."
Some important figures in the decentralized stablecoin space also expressed their thoughts. Sam Kazemian, founder of Frax Finance, commented, "this is a very interesting direction! Excited to see it live & will try minting $DAI with $MKR myself. So basically part of $DAI supply will be backed by its governance token? It's worth noting $FRAX is moving in the exact opposite direction"
Like he said, the Frax community just approved a governance proposal this week to change $FRAX into a fully collateralized stablecoin. In the future, $FRAX's peg will not be affected by $FXS.
The Endgame Plan was raised by Rune Christensen last August following the US Treasury Department's sanction over Tornado Cash. It aimed to make the platform more decentralized and censorship resistant. The Endgame Plan contained eight MIPs (Maker Improvement Proposal), including restructuring the DAO into multiple small units called MetaDAOs, each with its unique tokens.
Despite facing objections from some important $MKR holders, such as a16z, last October, the Endgame Plan was approved by MakerDAO to be able to move forward. Each of the MIPs will be subject to further votes before their execution on-chain.
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