End game plan which is a roadmap for a significant overhaul and Improvement to the governance and tokenomics of the maker ecosystem its primary aim is for the ecosystem to reach self-sustainable equilibrium called The End Game state in this episode with roon the Mastermind behind the end game plan we discuss why This overhaul is needed and how it will affect the maker ecosystem we go through the details of the plan’s five different phases including unifying branding the introduction of sub-dials leveling the playing field for governance and incentivizing participation and finally launching a new blockchain tune in for an insightful discussion about how these Changes are expected to position maker for Mass adoption and take mainstream the Innovative Concepts crypto is introduced over the years hello roon welcome to the fundamentals podcast it is great to have you on glad to be here you recently introduced a major update to make it out called the End game which games the Streamline and parallelize the maker ecosystem through brand unification launch of sub-dos introducing AI tools for governance participation incentives as well and then also deploying a new chain now you spoke about the very basics of this five-phase update in a few pods and I’m Hoping we can dive into some of the reasoning and the effects that you see these updates having on the maker ecosystem in this session to set the stage it would be great if you can just provide an overview of the goals and the vision behind the end game update for Maker now so what motivated the need for these changes you know maker is uh it’s actually the first ever Tau a very old project in ethereum and from the beginning the objective was always to create I mean first of all a decentralized stable coin right that was autonomous and self-running and useful Which is kind of one of the things that stable coins have I mean have proven to be one of the few things in crypto that definitely have a very obvious real world use case and then on top of that I mean there’s been this natural importance and and sort of synergy with Also developing a real decentralized autonomous organization because you can’t really have I mean a stable coin that’s decentralized requires governance and and sort of Regulation that is also decentralized right and that in many ways that’s really the big difference between centralized and decentralized stable coins is whether it’s a company That sits and sort of runs it based on sort of their own internal processes or if it’s a Dao that runs it based on these like open transparent processes and and decision-making methods voting Etc you know so when we launched the first version of die back in 2017 I mean It was one of the very first crypto black smart contract products into the advanced smart contacts to ever be launched but it was also definitely like it was absolutely the most secure smart contract ever made at that point right where we Pioneer things like formal verification and generally maker has Always been like at the Epson Forefront of security and sort of technical security technical verification right really being proactive with defending the risk of bugs or you know hex and so on right that could put the value and the stability of the collateral risk because I mean the stable coin is all About stability and and sort of security of your of your funds right but then what basically happened is after we launched Dai all the way back in 2017 I mean what we’ve realized over the last six years is that one thing is making the technical layer super secure right And sort of the stablecoin itself making that really secure but the dial component has sort of its own vulnerabilities and challenges and risks and end game is basically taking the same security mindset and not just applying it to the technical layer but also applying it to the governance layer And basically just like you want to build a smart contract that can be hacked you need to build a governance system that can sort of break through things like politics or misalignment mismatched incentives all these like things that basically occur when you throw humans into the mix which honestly Took us a really long time to kind of realize that this was as important as the technology which interesting enough and I’ve also talked about is a link to another podcast right but a lot of it stems from like the ideology of crypto and sort of the early ideological kind Of starting point of I think many people in crypto right that had this idea that like Libertarians are just Superior thing like that right and turns out well no it doesn’t work like that like humans are humans and you have and especially when you’re building something that you want to be autonomous and Self-sustainable forever right then you’ve got to prepare for the worst just like you expect hackers to attack your smart contracts so endgame basically is based on like deconstructing this fundamental problem of governance and human incentives and human interactions and group dynamics and so on and then basically kind of accepting that this is Reality and then safeguarding against all the pitfalls through these very basically carefully designed rules and processes meant to sort of provide checks and balances on all the different ways that humans are involved in the governance processes and all the different incentives that all these humans have as they’re involved to sort Of make it all balance out in a sense and ultimately make it enforce a long-term decentralized equilibrium that doesn’t kind of break or centralize due to a power vacuum or something like that and we and and then we use a lot of very specific techniques that are basically Based on all the best and most Innovative solution that have been seen in defy and crypto I mean since over the last you know eight and a half years maker has been going right so we’re kind of taking maker from being sort of one of the most I guess you could say Primitive and and sort of old school crypto projects and then catapulting it all the way to the Forefront of being like by far the most Innovative and most kind of advanced in terms of really tapping into the the true potential of what can be done with things like crypto Economics tokenomics you know like with three style like marketing and user adoption Community Building all these things and then kind of really locking it down into this thing we call the in-game state that is then the sort of final immutable autonomous equilibrium that then governs maker and the whole Ecosystem and allows it to then from that very stable base a foundation in a sense right you build this very solid foundation and then from there that’s where you can really have massive growth because you can parallelize you can do lots of things in parallel and you don’t Have to worry about things breaking because you focus so much on the security and the like solidifying the fundamental rules of the system which again goes back to the core principle of how dye was created in the first place which is make it super super safe and Then you can scale it up to billions of dollars right and now it’s something like make the governance really really solid and safe and you can scale up the number of contributors the number of governance participants to hundreds and eventually thousands and who knows tens of thousands or hundreds of thousands One day yeah I love that so it’s not just building something shiny but taking approach a fundamentally sound long-term sustainable stuff and I actually had a discussion a month or two back with voter compound from the maker sustainable ecosystem scaling core unit where we spoke about your expenses Dashboard and how budgets are allocated and how the Dao is structured to most efficiently coordinate capital and work so I think everything you laid out there builds really well on top of that discussion we had before because it was in a bit of an interesting time in the Middle of this big transition towards the end game but really excited to dive into the details behind the end game plan to understand how you’re revamping that whole model now starting from phase one you mentioned rebranding and introducing a new stable and a new governance token why are you doing this And how do you see that a unified brand and tokens contribute to the growth and resilience of makerdau yeah so first it’s very important to point out that the old tokens and sort of the old existing products and brands of dynamqr basically will not be messed with right So they’ll just continue working the way they currently work and end game and all these new mechanisms kind of solve the last problem which is the governance part of it but in many ways you can just ignore that actually and just keep using Dynamic care and the difference will Just be now they actually are sustainably governed for the long run I mean and if you just say keep using them that’s the only difference you’ll see right but a key goal as I was mentioning earlier in game is this sort of combination of and sort of the Synergy Between basically resilience and growth right that decentralization is a way to generate resilience out of of scale right where you have you’re more participants you have the more secure and sort of lockdown the equilibrium becomes because I mean you basically got more eyes on the problems right you’ve Got more more people working together and ideally share the same values and the same sort of understanding of the norms and the rules that are in their best interest to enforce so the new unified brand basically overcomes this problem of maker today has a hard learning curve and it kind of it’s hard For people to get into it because there’s this sense that it’s it’s very complex which I mean it is because it’s a decentralized stable condition like these things are super complex just like you know the Federal Reserve is super complex and any I mean large corporation is unbelievably complex right but what You want to avoid is you don’t want to like push that right up in people’s face and have that be the first impression they get is like this is really complex I don’t know where to start like participating in D5 and that should be more like a video game right like World Of Warcraft is really complex right but that doesn’t mean you know it’s still fun to get started with it right and you know where to start you know how to participate right and that’s kind of the idea of this sort of redesign and this focus on accessibility that end game Breaks to the table that it should be almost like playing a video game right it should be be like clear where do you start how do you get involved what are like the easy first steps you don’t have to worry about all the complexity that kind of runs itself that takes care of Itself right that’s the whole point of a doubt and and then this all at the very beginning starts with the brand itself right and that’s where today maker now has this huge problem that I mean already from the get-go there’s not just one brand there’s like two Brands and Like usually people get lost sort of already there right and typically just use die and then that’s kind of it and it’s very hard to I mean a lot of people use dive without having any clue what maker is right so having a unified brand is just already a good starting point For having a chance to kind of Reach people more broadly that I mean onboard people into crypto that aren’t even in cryptoday by by giving them a better and more simple and sort of friendly experience yeah that makes sense then phase two covers the idea of sub-dos which represent a pretty significant Shift in governance and decision making so can you elaborate on the reasoning behind why you wanted to implement these born decentralized divisions within makerdau and how you think that this paralyzing station will benefit maker yeah so I mean with these basically new versions of dynamqr right these new that We currently sort of call code name new stable and new gov token the killer app of those I guess you could say right the the sort of the distinguishing feature of them is that they have this ability to farm supply tokens and uh unless you’re us-based have to point that out Unfortunately but um basically I mean one really basic role that this plays is this is a part of kind of a gamification and the the user experience of it should be you know it should be fun to save money it should be fun and engaging to improve your finances right and to Onboard into the Global Financial system and and and so what this introduces is an experience that’s different from just like putting money in the bank and then getting interest rate and that’s kind of like it’s some kind of like it feels like doing paperwork whereas farming Right as we’ve seen in D5 right this is kind of an interesting killer app in crypto General where it’s fun right even though in the end what you’re kind of doing is you’re just making uh sort of financial decisions right then what’s been a big problem in deep buying a Crypto unfortunately yeah they came up with this great primitive of farming but mostly it was basically abused to trick people into participating Ponzi schemes right so subtars are totally different in that sense that while they still have that sort of arcade game feel to them right that you can Farm them and it’s Fun and it’s engaging right and there’s so different options they’re very sound businesses fundamentally right that are tied to make or call and make a protocol and basically the challenges and opportunities that they make a protocol has right so the most basic way to describe what do the subtitles do what’s The purpose of them and like why is it valuable to farm them out to people right and let a lot get a lot of participants in holding them and this is of course this is an imperfect analogy right but it’s it’s a good way to kind Of try to grasp it right is to think of make a call as it sort of remains because by having a sub-dials it allows us to make a call very very simple so maker who ends up playing a role that is again imperfect analogy but is is Similar to a central bank right that doesn’t deal directly with end customers it doesn’t give out loans to like companies or something like that right what the Central Bank does in this analogy is it provides Capital to the commercial Banks right and so in this analogy which is again it’s not exactly Like that right but but it’s it’s a good way to understand it the subtitles basically act these distribution points right similar to commercial banks that they generate dye in bulk or rather die and the new stable coin in bulk from make or call and then they allocate them Out into the ecosystem through things like vaults right like there’s this example spark protocol that’s one of the first examples of like how having sub-dials Sparks a lot of innovation because they can all build things in parallel they can come up with new innovative ways to distribute die out to End users to allow people to generate die against collateral because I mean it’s just it’s been very difficult and quite slow for maker in the past to do things like collateral onboarding and sort of these like top down this top-down decision making and execution is just not what a giant safety focused Like security focused Dao like maker is good at right and this sort of division between sub-dials and and maker call allows maker coaches like Focus even more on security right just like its only thing that matters security and managing tail risk and then letting the subdials focus on what I call Operational efficiency right how to distribute how to grow how to reach new Target demographics how to innovate on financial Primitives how to interoperate with different D5 systems and protocols and different blockchains all of that stuff is handled by the the subdials right so as long as make a call sort of Enforces the ground rules which is things like don’t take dangerous risk right and remain over collateralized and you know the more risk you take the more over collateralized you need to be and there’s all these like rules around that right that’ll then sort of enforced on the subdials and then the subdials from There they can kind of like they’ve got sort of free reigning right within those boundaries so they can compete with each other and ultimately the ecosystem as a whole needs this like simple unified brand around there’s a simple currency which we’re developing this brand for it That’ll be sort of this is the really easy to understand basically we’ve got a currency and it’s fun because you can you can Farm stuff with it you don’t just have to be locked into just getting a boring old interest rate you can choose instead to actually Farm Different things if you want a more engaging experience and then be from there it’s like it’s like a video game right you can jump into the world if you want to go deeper there’s all these sub-dials with their own unique ecosystems Brands thesis sort of business case right target demographics Target languages regions cultures the reality is you can’t make one product that just like speaks to everyone right and I think a lot of crypto tries to do that and it gets very Bland and corporate to a large extent right so subdials allows all these like different levels of specialization right some can I mean some can be corporate if they want to Target that segment right but then they can go all in on it right they can focus on institutional juices and so on right others can focus on the unbanked some kind of focus on I don’t know Gamers with three whatever right Whatever works actually right I mean the whole the beauty of it is I don’t have to know what works the ecosystem is set up so that kind of the natural Dynamics and incentives of it it will figure out what works and through basically an evolutionary process that’s what’s going To end up happening while the things that don’t work they’ll just you know not succeed and they’ll not they’ll not be what ends up getting done because they kind of if they can’t generate value there’s going to be no kind of fuel to take it further right yeah that Paralyzation makes a lot of sense now with these subdials regarding like their autonomy are you going to apply like the existing budget allocation model that you’ve had with like previous core units and everything else beforehand or is that changing in any way a lot of the people I’ve talked to about in-game They’ve sort of spent a lot of time trying to understand it and then at the end they’re sort of like something okay so the whole thing it’s actually a it’s like a budgeting solution almost right the reality is that’s like 95 of like Dao politics and challenges is budgeting And then another thing that’s almost as important right is like I guess for Maker’s case it’s more important what is like collateral allocation right but it’s all these like relatively basic financial decisions such as where to spend money that are just once you drill down on them to become infinitely Complex because of like politics difference of opinion about imperfect information right so I mean the absolute key kind of feature of subdials is they don’t have top-down co-unit style budgets at all what they have is what I sometimes call self-contained kpis basically the way they fund their operations is through is directly Through their own success right and maybe the most simple example of this is something called the accessibility reward because one of the things and and this is kind of the basic life right so one of the things that stuff does they do is they operate front ends so you Have this multiple front-end ecosystem right so we want to have many different decentralized resilient front ends so there’s not a single point that can fail right or be captured or something and so each sub-dial runs its own and so then to fund their the operation of this Front end and to encourage them to build it and make it really good and and useful and so on and and have it provide the best possible access to kind of like the core product of the stable coins and the farming opportunities subdives are paid a thing called accessibility reward Which is basically something like a revenue share of the value they bring to to make a call right so you don’t have to make some kind of centralized top-down complicated political decision about oh these guys did that much so they should get paid X and over here is You’ll be paid why whatever it’s fully autonomous it’s like well if you bring in a billion in uh die demand and and new stable demand then you get I think currently the accessibility reward is 20 basis points so that gives you 2 million die per year in budget right so it’s That simple like there’s no discussion or debate or whatever there’s no unfairness right the same rule applies to it rules apply to everyone and it’s kind of a close loop where the subdials can just take those basic rules sort of that basic incentive and then they can Just go and operate right so they can operate much faster and leaner and smoother and Tighter and their smaller more focused groups right in addition to the accessibility reward the other really big one is then this thing called the allocation system that’s this thing this analogy I was talking about earlier With the Central Bank being make a call and then the subdials being like a commercial bank right that the subdials have this unique privileged access to generate dye and bulk at What’s called the base rate so the lowest possible rate in the system from make a call and This is actually the only way to generate diet out of Miracles so the subtitles basically are the ones that allocate all the dye into the and all the new stable into the marketplace and then they can charge a spread right and so it basically the more effectively and Sort of more utility they create by Distributing the dye out to the right place based on the right collateral the higher spread they can charge right because the more useful it is the greater premium the market is willing to pay so again it’s like they get rewarded For like making the right decisions that have that create the best utility for the end user right for instance if they’re really good at Market making die and and new stable and bring it out to the end users that that need it the most where there’s most liquidity and where There’s more you know then they’re naturally going to make more income from that because they’re providing it in a place where the the activity is and where the demand is so it’s their own incentive to do that like maker governance doesn’t have to sit and be Like you should put die over there or there or whatever and try to sort of top down figure out where’s the right place to provide liquidity for that the profit motive just naturally drives the receptor to do this and this idea right I mean this is really basically it’s About aligning incentives right and that really goes back to what I was talking about in the beginning of like the fundamental idea is to sort of fool proof how the governance works works so you don’t have to sit and police whether someone is doing what kind of what’s Best for the system or what’s just best for themselves right you want online incentive so what’s best for the sub Towers what’s best for the system as a whole without having to resort to politics or top-down distribution of resources and so on and this is really what makes them so exciting because this Is why you can then once you have these basic building blocks in place right that’s when you can kind of let them lose and you can parallelize them and you can make a lot of them right and so if it works I mean it’s gonna be super Exciting to see like can you really just make more of them and as you keep making more and more the system just gets more and more intelligent in a sense right that’s kind of how the sub house work it’s like they sort of slowly more and More of them are just created and then if some of them fail then I mean they’ve got got their own sort of p l right they got their own balance sheet their own collateral their own their own Capital if they make mistakes if they can’t figure out how to generate value then They run out of capital and then they just die and if they die that’s actually perfectly fine it’s sort of the system is designed for that to happen there need to be allowed to fail so they can be allowed to experiment and when they fail it’s a good thing because it Teaches everyone else what not to do basically right and it’s it sort of provides crucial data that is then because everything is transparent is because it’s a doubt right all this data is very efficiently integrated across the rest of the league system right as everyone else is trying to figure out Which decision should I make that benefits myself the most right and I can see okay that didn’t work well let’s not repeat that mistake right and and then as the system just keeps going it keeps growing it’ll just naturally get more and more I mean resilient and and Valuable and and able to grow yeah that’s awesome and I gotta say uh what you said in the end there the sub-dial model reminds me a lot about supercells you know the gaming company behind uh Clash of Clans and other really successful games we’re at the core of The company kind of as their name states you have these supercharged cells which are small independent game development teams that operate completely independently and they’re like sole goal is to innovate bring like super successful games to the market and if you want to innovate you’re going to Have to fail and as far as I’ve understood like supercell’s culture failure is like really highly celebrated because it’s more than required for a company to be able to push out top 10 Crossing games globally on a consistent basis so I think that’s at least one Case that proves that this type of model works really well and just had to mention that because it came to mind but moving on to phase three it’s very much focused around AI tools to enhance your governance processes so can you speak about both the problem that these AI Tools will solve how they’re going to solve it and then what their role is in leveling the playing field for community members as you state in the end game plan yes I touched upon this quite early right that the key to overcoming the problems with humans and incentives and I mean the principal agent problem right where ultimately not everyone’s got the same incentives and people that sort of sit on the sidelines that are less involved they have different interests usually they just want something like the token to go up or the system to get used more whereas someone who’s like Deeper in the system their incentives can sometimes be something like accumulate more power and access more budget streams and so on right build up more leverage build up more information and symmetry if you’re thinking of them as like perfectly rational selfish actors right and then like the solution That we realized is like the only thing that can reasonably replace a centralized hierarchy and a CEO and so on that I mean because that’s kind of that’s how you normally deal with this problem that’s the only way that sort of works in the real world today right like There’s no example in the real world today of like a flat organization with like a peer-to-peer structure actually scaling up to a life size I mean every single exam you’ve got of that once they reach a certain size they um they become hierarchical and centralized because They have to and that’s I guess it’s sort of related to you know dunbar’s number right but there’s just a certain point where you’re no longer going to identify as much with the group as a whole as you are with your small little group and sort of your own incentives Because you’re beyond the point where you know everyone and you trust everyone so the kind of the system stops being people and friends and it becomes more like just a faceless system anyway so this and then you have to put in a CEO and you have to put in a hierarchy and Sort of a mechanism to to kind of police this kind of misalignment right as it occurs in an organization right so the solution that I mentioned that is the way we think this can be dealt with is lots and lots of rules and processes and documentation basically you know Something like let’s say we have a sub-dial that wants to do a marketing plan for something right a marketing push in Japan right then a really typical question issue is like okay well who do we hire to do this work right who do we pick as the provider that we want To actually give a grand of you know some money and then they’ll go out and do a do a marketing push right and then maybe there’s like three different options and the question is which one of those three do you pick and this is like I mean this is a age-old problem right But like what you have then I mean in the mega except we call them facility right you’ve got someone who sort of has to ultimately make the choice you could also have token holders themselves but actually even though suffer from the same problem anyway right and so the Issue is the one who’s making the choice of which of these suppliers to pick like their incentive is to pick whoever benefits them to pick right like so so then you immediately run into the problem like nepotism for instance right but if like if there’s three supplies And one of them is like uh my nephew’s company or even my own company or something then my incentive is going to be to pick that if there’s no other constraints so the system has to be able to go beyond just like ask for some like Ask for for bits and then pick whoever you feel like Piggy right it has to be like get a lot of very detailed data about what are the different proposals and then kind of like apply a sort of almost like an algorithm to hold up these different pieces pieces of data And pick the right one based on who’s got the best price who’s got the best track record who’s got the best quality who’s got the best blah blah all these like metrics I mean ultimate is all about data kind of data and then sort of applying an algorithm to that data to Figure out which is the right one to pick right so we need to have written down processes of rules that basically describe best practice for things like what does it mean to have a track record what does it mean to have a good price like there’s also weird things like what Does it mean if a price is like too low suspiciously low right that’s also a piece of data that you have to be able to to handle right and all of this data like and all of the kind of the the internal data that helps with like sort Of the algorithmic stuff that helps with integrating this external data and sort of holding it together to make the decision about what’s the best option to pick your for instance right that is all codified in maker in what we call the alignment artifacts so alignment artifacts it’s basically it’s something Like a pseudo legal system almost I mean it’s like a very large set of of rules and that almost like like laws of the Dao in a sense right except they don’t have any legal significance they have sort of a crypto economic incentive impact right yeah in some sense what They help is they help everyone to align themselves with the system and understand what’s in my best interest what action is in my best interest to take and then make sure sure that individuals understand like are sort of guided towards taking the actions that are not only their own best interest but Also in the system’s best interest as a whole and where the AI comes in is basically I mean this thing is like it’s it’s a giant rule set right so so currently it’s about 130 pages of rules right and this is and today it’s just in its very very early super shallow stage So it will grow to become 100 times a thousand times as big over time as we start like sort of at scale integrating as much data as possible Right learning from failures you know like learning from successes right getting in expert opinions and advice right and the Downside to this approach is I mean or rather this is just a fundamental downside I was discussing this earlier right is that you’ve got people on the outside that are not too involved but that are actually quite aligned because they just want the token to go to be Valuable and the product to succeed but then you’ve got sort of the Insiders that have all the special knowledge and their incentives can be different than the ecosystem as a whole right and this is a big problem because you’ve got information asymmetry you’ve got complexity of symmetry and I mean and One way to actually deal with this is through the rules right because of I mean there was a nepotism problem earlier right of like you can have rules that kind of make it easy to figure out if something was something done the way it should be done or was it done in some Unexplainable way that may hint at there being some misalignment occurring right and what the AI tools basically do is they just make this like accessing all this data so much easier right because that’s something that llms right large language models and sort of the current generation of AI is incredibly good at I Mean I’ve described as doing paperwork essentially right so I can like summarize information it can extrapolate data and sort of you know I mean so it can both on one hand help accessing all this data kind of like traversing it right searching through it and being Like so one of the things we want that governance as tools to be able to do is to have an average user that are like okay I want to check in on maker but I’m not going to look through like all 200 proposals that are happening right now I Just want to ask the AI what’s the proposal right now that is kind of the most suspect like if I have to focus on one thing and try to figure out if things are going well where do we have the most data pointing towards something not being totally clean uh and and being More controversial right and then that’s where the humans can sort of direct their attention towards the things that are that are more complicated right it could be some kind of edge case that related to let’s say marketing right where the rules just weren’t set up correctly to handle I mean this is a Example I like to bring up right it’s like there’s someone offering to do some work and they’re just offering like a suspiciously low price and the data might say okay just pick them but then humans will step in and be like Ah that’s you know I’m not we’re not going To pick someone’s gonna say the dude for a hundred dollars right it seems like we’re just going to lose 100 and nothing will happen right and so then humans can kind of step in and then they can kind of you know synergize and work together With AI in a sense where the AI and the system can kind of do things it can get us over 90 of the way right 80 90 of the way and then humans can then make sure they only spend their time doing the remaining you know 20 of the work and Not the boring 80 that’s just paperwork that that you can have a machine do right and then this way you can take someone who’s sort of under periphery and actually you can get them to be quite deeply involved and have some very meaningful contribution as well as you Know be a real chick and a real counterbalance to the the Insiders so that ultimately and this is the best part right what this means is then again I mean just I was talking about with the with letting the subtitles roam free right this means you can let inside us You can really let them do the thing because like with this kind of system you can trust that if they do something wrong you will you will catch them in the ACT essentially right you don’t have to constantly worry about something’s happening in a black book you don’t Understand you could have the AI tools I mean you can ask it what’s what’s going on is there something in this black box like what’s suspicious what should I look at to understand whether something’s wrong here and it will be possible even if you’re like a relatively uninvolved Outsider right That’s really the the Holy Grail as I see it right that in the end you completely level the pain field where I mean it’s like using chat TBT right that makes anyone feel an expert in whatever subject right and this is like that but it’s just specifically for maker Governance yeah that’s such a massive unlock I feel that the complexity and then the abundance of data related to all governance processes has just been such a bottleneck and build such a barrier for people to even be in interested in like entering and trying to participate then in phase four you Also highlight governance participation rewards can you speak a bit about what the role of these incentives are within this process and how they even further encourage active participation in governance once we have basically yeah unlocked governance resilience and accessibility with AI tools and with probably building out the alignment Artifacts right this sort of rule set and data structure that gives the system kind of a mind on its own right then we can proceed to to what’s kind of like the final piece of end game in terms of of achieving this like endgame state right so that is governance Participation rewards so I mean the big problem with dials in the specialty maker in many ways is voter apathy right because it’s like today it’s super difficult to participate right it’s very complicated it’s very difficult so there’s like this huge barrier to entry and then like you don’t gain anything From participating you have to pay for it actually because you’ve got to pay gas costs and you can just do nothing and then someone else will have to figure it out right and then what ends up happening is a collab just down to just being the whales because they’re Sort of like less men standing is like whoever the largest whales are then no one else is doing it so of course they have to do it otherwise they have the most at risk right and so with governance participation rewards you kind of like completely eliminate that Dynamic and replace it with a different Dynamic which has its own set of problems or right but the new Dynamic is suddenly everyone’s going to be voting because they get paid to vote so they’re going to be like yeah I want to get paid so I’m I’ll go and vote right the Downside with the I mean now yourself voter empathy now you’ve got tons of people voting the huge downside you’ve created is they’re not particularly intelligent photos right because they’re not actually there as their number one priority is not to improve the system their number one priority is to make Some money by getting these rewards right and but that’s where I mean basically all the other stuff we’ve discussed the whole time right that’s where these are the things that allow this final step to be safe and the reason is just like you put a lot of guardrails around sub-dials right and Then you kind of let them let them do the thing the alignment artifacts and all these rules and the whole I mean end game is all built around just putting God rail after guard rail after guard rail around these people that come in to to get voting rewards and sort of the Idea is again is to start taking back to like the video game user experience right that it should feel like I mean okay you’re here to get to get world of rewards you may as well participate in this sort of simple easy kind of gamified and ideally fun right Experience of spending I mean five seconds thinking about what’s in the best interest of the of the dial right and there is also a big commitment actually in getting the government’s participation rewards as well so you do kind of lock up your tokens so you have like a greater exposure and you’re gonna Have some vested interest and not seeing it fail beyond what you would have if you you just held the tokens right and so the end game and the thing we call it the easy governance front end which is this sort of default highly security centralized front end that will be Available to Holders of the governance tokens right it basically guides the users through a process that they have to complete in order to be able to get the rewards and it involves sort of picking what we call a governance strategy provided by these new constructs called aligned voter Committees which are basically other MPI holders so it’s basically it’s these aligned voter committees are basically groups of MPR holders so they have themselves to also be empowerless it’s not enough that they’re just like insiders and and contributors they have to actually hold them here to do this Right so you’ve got this alignment where MPR holders are sort of like the more active NPR Elders are helping the less active mkholders with basically presenting them different options that they can pick and then very fundamentally one of the I mean there’s these different kind of decision-making Spectra that you pick from and the most fundamental one is something like do I want to increase budgets or do you want to decrease budgets because I mean like we talked about earlier it always comes back to budgets and that’s like the most fundamental thing is like should we Spend more should we spend less should we focus more on the short term two focus more in the long term right so that’s like the most fundamental decision that we hope the system can bring out a little bit of kind of wisdom of the crowd of every single person That’s ultimately that just there to get the rewards but as they’re there they may as well think for a little bit and and sort of input their opinion right and then I mean ideally really with all of these guard rails and all of his checks and balances we end up with yeah With something like wisdom of the crowd where right away if you really ask everyone if they think budgets should go up or down then you may end up with like a pretty good aggregate kind of answered around what is the ideal kind of safe consensus approach to how we should do Budgeting right now and then of course also a number of other decisions luckily though they’re not like too complex and that goes back to the subdials again right that in the end it is somewhat limited actually what even has to be decided so it’s kind of like layer upon Layer of security measure right like it’s not very complex but we still make it really really easy to like make sure that even the few decisions that do have to be made we don’t take that lightly like you really have to be very serious about making sure the right decisions Are made for that right and then we have this lock up so you’ve got extra skin in the game but we also make it gamified so it’s easy for you so you don’t have to go out of your way to make a decision that’s good for yourself and yeah like All in all this is kind of the thing that’s gonna lock it down set it in stone right because once you’ve got all these incentivized voters and you’ve got a system that sort of self-regulates through a data structure that can kind of run itself essentially right and that Knows how to protect itself and knows how to maintain its own equilibrium and that knows how to like integrate new data to benefit its core purpose of generating more value for the ecosystem and also generating public good to kind of remain in balance with it with External uh World in a sense I mean there’s nothing that can stop something like this because nobody is gonna basically I guess you could say no one will profit from stopping it right everyone will benefit from helping it and from making stronger and from kind of just getting closer to this sort of Universally aligned immutable autonomous secure self-growing end state right that it will always be I mean it will never fully get there but it will always continuously go in that direction yeah this is such fascinating stuff and to be honest while listening to you I can’t help but think that what you are laying Out here right now will be one of the most interesting case studies in every single business school and ivy league university in the next 10 years the concept that you’re trying to crack are like existential problems that every single centralized organization has been struggling with we’re speaking about operational efficiency incentive Alignment bringing autonomy to operations and what you’re trying to do is establish the Frameworks and parameters that take these really hard to solve management issues and make them work in a fully decentralized autonomous environment and if you’re able to pull that off that will be the case study of The century just moving on to phase five of the end game update which was the phase that actually surprised me the most was the plan of deploying a new blockchain can you speak about what the rationale behind deploying a new blockchain is yeah it’s another thing That I guess surprised me the most as a self-proclaimed ethereum maximalist right so I’ll get to the kind of the real reason why it’s needed in the end but first I guess a way to kind of help make sense of it is we’ve gone through all these stages we’ve built all these Different components you know we build new tokens sub-dials farming mechanism the allocation system this sort of ecosystem of sub-dials and how they interact with each other governance rewards like I mean there’s so many sort of different bits and pieces that will have kind of been built in some sense on Top of each other on ethereum right so everything’s just like you’ve got the existing multi-level die then you build on top of that then you build some more stuff on top of that everything is kind of like built together sort of somewhat organically over time right and what Then happens with the new blockchain is I mean because then in the end it reaches this you get to Governor’s rewards and now you’re sort of in the end game state where like now it’s not going to change anymore because no one’s in control right like the the voters are Now just sort of like voting to get paid and as they vote to get paid they vote to keep things the way they are because that’s how everything is designed right so we’ve reached the end State and then there is a huge amount of efficiency gains to unlock by then treating Everything up until that point like all technical implementations of another Point as sort of technical debt right in a sense that I mean all those decisions work on it organically made without understanding the whole right and by introducing a brand new blockchain you can design like the entire stack end to End with the full kind of architecture in mind right so things like the security model of the blockchain can be tuned to basically follow kind of the security model of the Dow itself right because there’s actually no point in being because of how the stable Zone Works and how the dial works you can’t really make it more secure by putting it on a blockchain that is more secure than the Dow itself right like the security will always just sort of degrade to whatever security the dial can maintain and then there’s all this stuff around Like tokenomics these very Advanced sort of what we call the neural tokenomics which is this very Advanced almost like AI like mechanism of Distributing token value and then recapturing it and sort of continue like sort of the cycle of Distributing it broadly out and then recapturing sort of signals I mean some Basic questions like which tokens do people farm and actually hold on to versus which ones do they farm and dump that’s actually a kind of important signal that is in some sense a governance decision right even though you wouldn’t think so so then which token you choose to farm which subtitle Choose to farm is actually almost like voting and it’s going to impact the the behavior of the ecosystem and so the more efficient you can make that the more intelligent you actually make the system right the more fundamental value do you create in terms of the system making the right decisions right but Anyway like the thing is all of this is still just like actually just like a nice side effect nice bonus in the end it would never be worth it to gain all these advantages if the cost you have to pay is to like stop being sort of Natively based on ethereum mean it right because I mean that’s just I mean in the end it’s just you want to keep things the way they’re like there’s no reason to do stuff you don’t have to do even if I mean there’s a lot of I mean there’s a Lot of efficiency arguments and so on but in the end I mean obviously yeah as an ethereum maximalist I mean it’s obvious that ethereum is the kind of the central blockchain of the future right sort of where all the network effects will occur right so you have to be Present on ethereum so yeah there needs to be a really really good reason to kind of move off ethereum right and so that really really good reason is in the end actually sort of as surprisingly esoteric governance detail basically I mean nobody knows this stuff right it’s Only very few people think about this or know about this but it’s this is the absolute key to like make a governance and to this whole thing right the whole security of die right it’s all based around this idea that you can kind of escalate misalignment right so the most Basic thing is if something’s wrong I mean then you can vote and then NPR holders should vote to improve the system so that it’s better because that should be known interest right but then the problem is what if the empowerers are bad like what if they are wrong Basically and this is a fundamental problem in all of D5 where actually I think every single other D5 protocol in the whole world right if I mean and often they’re not even controlled by their token holes right but if they are controlled by their tone holders then if The token holders decide we’re going to steal all the money then actually it’s game over they’re just gonna steal all the money and there’s actually no solution to that problem right anywhere in D5 except in maker so in mega we do have a solution because I mean yeah we Take security and and we’re stable coin right so it’s like that kind of outcome is just it’s not acceptable to us right and big problem with it is there’s a huge incentive to actually do that you’re kind of like trusting people every single day to not pick what’s in The best self-interest right if they were rational they should steal the money they’re choosing not to do it because they’re sort of they believe in like a greater good than just making money right and that’s kind of how most defect works right in maker there is this thing called the emergency shutdown Which is basically a form of minority stakeholder protection so like a majority of mkholders they can make arbitrary decisions right but as much smaller minority they can at any time choose to shut down the protocol so what that means is if some if a malicious majority does a governance attack where They tries to steal all the collateral then the rational thing for honest minority to do will be to shut down the protocol because you’re better off shutting it down so nothing gets stolen if it’s already compromised and if you don’t shut it down then we’ll have it’s Just tons of money with this though so this is a way to kind of like game theoretically create I mean it was it’s like a I don’t know like a Nash equilibrium somewhat right like where you’re just not even if you are purely selfish and you just want to make as Much money as possible just still not gonna try to steal the funds because you’re always going to be worse off if the product protocol gets shut down because now your MPR tokens are even worthless right the problem unfortunately with this mechanism is it introduces a new problem and this is Kind of like classic crypto right classic governance is like every time you’ve got a problem then you make some solution and then the solution becomes the problem right so the problem with emergency shutdown as success today is that this is now the new most dangerous and most biggest vulnerability in the System is anyone can shut it down right it can also be shut down maliciously the good news is nobody’s going to make money from doing it but it also means it’s quite inexpensive compared to kind of doing a real governance take it’s relatively inexpensive to like shut down The whole thing and just like Nuke the project right and and destroy the stable coin and for like trolling or I don’t know maybe an adversarial state or something would do it or whoever whatever right the problem is this is a real problem that exists today and Unfortunately while I mean the theory of emergency shutdown is this sort of smooth unwinding of the system right where everything is just settled out and you know everyone gets there instead of holding die right then what they get is they get the underlying value of the collateral but in practice I mean we Know that it would be a calamitous event right it would be you’d have a crash in ethereum price you’d have like crazy congestion as people try to redeem the collateral they’d have tons of like illegal issues and this is the worst part like all the legal implications of Die holders trying to claim real world assets it’s just like disasters it’s like unacceptably bad that this is possible to occur right so I mean we’ve actually been grappling with that problem for like yeah I mean the whole time of the project because we had the solution of emergency shutdown from the Very beginning like what we always wanted was this ability to like smoothly recover and be like okay we shut down but then we’ll put it back together so as a user you don’t have to go through this like painful process of redeeming your funds and I mean you’ll definitely Never use the Prodigy again if you have to go through you’re forced to do something like that with your savings right which are meant to be stable and safe right so I mean the solution is replace the emergency shutdown with hot folks basically so the hard folk kind of Governance mechanism is kind of the method of kind of of escalation you could say that kind of goes beyond shutdown that just like shuts it down instead it’s a way for like all of the honest participants I guess right they can all agree let’s migrate to this Other state where the bad ones are just forked out of the system and then by combining this with the alignment artifacts then you can have a really good sense of like what does it mean to be a bad actor what does it mean to be a good actor that’s all this data like There’s going to be this you know massive amount of data enhanced like AI tools right over years and years of sort of proactive effort to really like precisely Define when is someone an attacker so you hard fork and you remove them when was it legitimate and someone Else was the attacker and then you the the shutdown sort of the hard fog happening for legitimate reasons like you’ve got to have like clear rules around it and of course it’s still possible that you you actually can’t resolve the situation and you’ve got sort of what I call a governance Breakdown we just got some kind of like weird governance Edge case where you don’t have a clean resolution and so you can’t do a hard Fork because you you can’t agree on what should the hard for like what is the idea what what is the correct State according to the rules Then you still have no choice you’ve got to do a real shutdown but the good thing is you can’t sort of troll the system anymore and just like force a shutdown for any reason it can only happen in very rare and probably impossible cases right so it eliminates the biggest Problem with the system today the biggest sort of long-term resilience issue then it does introduce one new major problem right and that is uh kind of the bridge problem to ethereum and specifically the security of the of the staked eth and the East collateral of the system and so our solution to this Is is something called the two-stage bridge and it’s basically it’s the best possible bridge design you can make when you kind of accept the reality that Bridges from block from two blockchains to each other are basically just kind of multi-six essentially right and so the basic idea of this two-stage Bridge Solution is that over time as ethereum grows if it remains valuable and decentralized then you will have truly decentralized doubts and governance processes exist on ethereum data and if it’s big enough and if it’s open enough fair enough then these dials and governance processes that run natively In ethereum they will be aligned like they will not be malicious you know just like today like all the protocols today they’re not I mean at least all of them are not getting governance attacked all at once even though in theory like we’re talking about earlier they should do That if people are selfish right but but they aren’t because humans I mean especially accurate and if they’re set up the right way in the right context there’s more to just making a lot of money like quick money today there’s a there’s sort of a longer term and bigger Picture right so the bridge should rely on on basically letting the native Taos and the native governance processes on ethereum be kind of the final sort of judges of which hard to choose if the new blockchain hard works right and um and then my basic thesis for why this Works is is basically that if Eve is remains a valuable crypto which I expect it to be right I expect to become more and more valuable all the time right but that value is derived in a decentralized use case and a decentralized value proposition and that is only going to Exist if there are real dials in ethereum like if we end up in a future where there are no real doubts in ethereum there’s no real governance in ethereum it’s all just like a bunch of multi-six or a bunch of companies or centralized stable coins then I don’t Think in the long run that eth will be a valuable asset and so we will not I mean in that scenario it wouldn’t be that important that the security of the bridge wasn’t as solid because there just wouldn’t be that much exposure to it because ethereum just wouldn’t be That interesting but I think the other thing is going to happen right I think that ethereum is going to be so interesting that there will be a critical mass of like trustworthy aligned transparent decentralized dials and we can actually use those to basically keep the bridge secure even if Maker itself has kind of a meltdown basically got it yeah having covered all the phases one through five of the end game update let’s zoom out a bit and look at the big picture to wrap this up with everything that you’re introducing how do you see this update positioning Maker within both the stablecoin market and then the Market in general because streamlining operations unifying Brands enabling parallelized Innovation you speak a lot about gamification and making saving fun which to me sounds like you’re really trying to build a business operation which is targeting like a mass market so can you just kind Of sum up where you see this update taking maker in the long run what we see is as the objective is it’s not about how we position ourselves in the crypto Market because I mean to a point it’s the whole point is to go beyond the kind Of some sort of like closed ecosystem of crypto and actually make these amazing Primitives and products right decentralized Finance Financial gamification you know transparency resilience all this stuff make that available to to regular people in the real world right the age-old mission of crypto since the very beginning is Financial inclusion right and I mean there’s been a lot of distractions over the years and failed experiments and so on right and this is what maker and die set out to achieve from the start right that’s what I’m really hoping is that this will actually step English crypto And stable coins as like a completely normal thing that people do because you know it allows them to basically make their financial decisions fun right and makes it easier to understand it makes them feel more safe and sort of make them understand that there’s a way for Them to actually verify that their money is safe right they don’t just have to trust some Authority you know like they can literally directly read the rules and have an AI analyze it for them to verify that they’re safe if they want to do that I mean they probably don’t want To do that but they could right and they’ll know that others can do that and While others are basically doing that then they can have fun kind of like picking sub-dials right maybe you know kind of understanding the the connection between things like what you can get out Of your money and what that means in terms of where that money is going and how that’s generating growth in different ways right and then how you can contribute with your own decision or your own participation to to increase that efficiency potentially right and I think there’s like a massive opportunity For that and I think that there’s so many people today that they get into crypto all excited and then they get burned on like Ponzi schemes and and you know like stupid ideas basically because those are the ones that have the flashing lights and and have the fun User experience and is able to attract them and we want to replace all that with something that’s gonna you know still fun it’s still attractive it’s still flashy if that’s what you what you like right I mean there’s gonna be something for everyone with subtitles right but the key thing is they’re no Longer just gonna get in with high hopes and get burned and sort of like spit out and never never to return right we want to keep them in and we want to just keep building the cake and make it bigger and bigger and bigger and the best part is And this is what I’m really looking forward to myself right is there’s not gonna need to be any single team or any single person or company or anything like that to make this work right it’s gonna be this giant data structure basically it’s gonna be all these like Rules that will ultimately make it all running and they’ll just keep improving themselves and and they’ll do that by bringing all these people in and just like doing that little bit of like data mining out of them right just get a little bit of the wisdom of the crowd Out of every single participant and then have solid you know open transparent data structures to kind of process all those decentralized inputs and and just keep the system moving forward and keep it growing and um yeah keep it fresh and sharp right let the subtitles innovate And and just can continues to evolve to find new ways to attract more and more people again with I mean and yeah I’m guessing I’m speaking so personally right I’m looking forward to then just like leaning back and watching it all play out without having to uh ever get In the trenches ever again right and and I can just uh sit back and and watch it all unfold love it and uh like I said this can be the case study of the century so I can’t wait to see how everything plays out and uh best of luck To you roon and the team and I hope that uh once everything’s said and done you get the chance to rest as well really appreciate you taking the time to do this thanks so much for having me In this episode of the Fundamentals podcast, we’re joined by Rune Christensen, Co-Founder of MakerDAO – a decentralized stablecoin protocol built on Ethereum, and the first-ever DAO.Maker recently published their Endgame plan, which is a roadmap for a significant overhaul and improvement to the governance and tokenomics of the Maker Ecosystem.Its primary aim is for the ecosystem to reach a self-sustainable equilibrium called the Endgame State.In this episode with Rune, the mastermind behind the Endgame plan, we discuss why this overhaul is needed and how it will affect the Maker Ecosystem.We go through the details of the plan’s 5 different phases: Unified branding, subDAOs, leveling the playing field for governance, incentivizing participation, and launching a new blockchain.Tune in to this insightful discussion to learn about how these changes are expected to position Maker for mass adoption and take the innovative concepts crypto has introduced over the years mainstream.The 5 phases of Endgame: https://forum.makerdao.com/t/the-5-phases-of-endgame/20830 MakerDAO Site: https://makerdao.com/en/ Twitter: https://twitter.com/MakerDAO Rune: https://twitter.com/RuneKek MakerDAO’s dashboard on Token Terminal: https://tokenterminal.com/terminal/projects/makerdao Make sure to leave a comment if you have any questions 🙌 📊 Token Terminal platform: ► https://www.tokenterminal.com/ – 💬 Join our Discord: ► https://discord.com/invite/tokenterminal – 📱 Follow us on Twitter: ► https://twitter.com/tokenterminal – 📩 Subscribe to our Newsletter: ► https://tokenterminal.com/resources – Timestamps: 00:00 Introduction 01:39 The goals and vision behind the Endgame update 07:28 Unifying branding & how it contributes to the growth and resilience of Maker? 10:13 SubDAOs: How will parallelized growth and specialization benefit the ecosystem? 15:40 How will SubDAOs fund operations? 22:02 AI tools to enhance governance processes & level the playing field 30:26 Governance participation rewards 36:52 The rationale for deploying a new blockchain 48:32 How will the Endgame roadmap position Maker in the market? … Crypto redefines the way businesses are built and operated.Token Terminal gives you the tools to evaluate and track the most promising projects.
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