Exclusive Interview with MakerDAO: Solana is not our only choice

Interview: Jack, BlockBeats

Compilation: Sharon, Luccy, BlockBeats

Editing: Jaleel, BlockBeats

Since "Escape from Ethereum," discussions about MakerDAO have been ongoing.

Maker is the oldest DAO, with an annual income of over 142 million USD and project expenditures of over 44 million USD. At this scale, MakerDAO has been struggling with coordination issues for many years.

To address the governance challenges in the MakerDAO ecosystem, this veteran DeFi project announced that it will use the Endgame project, which has caused dissatisfaction among various VCs, including a16z, who sold all their tokens.

On September 1st, MakerDAO founder Rune Christensen published "Exploring the Branch of Solana's Codebase for NewChain," which instantly caused a stir. The next day, Ethereum founder Vitalik sold 500 MKR tokens worth approximately 581,000 USD and exchanged them for 350 ETH, sparking widespread discussions about MakerDAO "leaving Ethereum" and "offending Vitalik."

The crypto community has various speculations about the future direction of MakerDAO.

Today, during the TOKEN2049 conference in Singapore, BlockBeats exclusively interviewed MakerDAO founder Rune Christensen, where we can uncover some of the stories behind MakerDAO's governance and public chain disputes.

Through Endgame, MakerDAO Seems to Have Found the Answer

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

Endgame is the practical implementation of Alignment Engineering for the Maker ecosystem, which will develop the ecosystem in four main areas in the short term. Each will be gradually implemented over approximately a year. Previously, DAI and Maker brands were separate, as were their user groups. MakerDAO hopes to change this by introducing a new unified brand to create more consistency between users and governance.

The most crucial aspect is that DAI and MKR will continue to exist! The upgrade is an option. The new unified brand will focus on making it as easy as possible for people to start using stablecoin products, DAO, or both.

The temporary codenames are: NewStable (NST) and NewGovToken (NGT). The revaluation of 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, as any cryptocurrency project cannot escape the issue of community governance. MakerDAO clearly has a deep understanding and experience in addressing this issue. Rune believes that in order to govern the community effectively, it is necessary to "simplify" by breaking down the large and complex system into various subsystems, and Endgame was born for this purpose.

Avoiding MakerDAO Governance Falling into Two Extremes

BlockBeats: Many investors, including Vitalik, have different opinions on the vision of Endgame. Your continuous purchase of MKR in the past few months is it a demonstration of confidence to the outside world? What is your view on Endgame?

Rune: There have been many large MKR holders in our ecosystem who engaged in some institutional-level transactions with the foundation many years ago, and I think their motivation was actually based on the fundamental way that investors work, which is to get a good trade and then exit. But now we have a new batch of institutional MKR holders who are purely trading in the market, which is a completely different situation, they are true believers in the system.

Generally, they buy MKR because they understand the ultimate goal to some extent, which makes me very happy because I was initially disappointed with cryptocurrency investors. But I think these new institutional supporters are showing a different side, they are people who have faith in the technology and the possibilities for the future. We need to pursue that "sweet spot" that can create something meaningful and valuable for the real world, the combination of decentralization and blockchain technology with the real world.

This combination exists in reality, not beyond reality, so it must 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 lean towards either extreme.

BlockBeats: One problem that almost all DAOs face today is that top venture capital firms hold a large number of positions, but when it comes to voting, is it the community or the top venture capital firms that control it? MakerDAO has also experienced this issue. Do you think MakerDAO governance will inevitably fall into these two extremes, either venture capital firms controlling everything or the founding team controlling everything?

Rune: I think both of these scenarios are impossible to succeed, basically most cryptocurrencies have not achieved this. This problem is particularly serious in governance, and we see that almost all governance is completely broken. Even projects like MakerDAO, which are relatively less broken compared to others, still need a profound reform in the way the entire system operates.

This is the core idea of Endgame, that to solve governance issues, the only way is to simplify. You need to make it simple enough to ensure that decisions are made as they should be. Endgame's approach is to rebuild the basic process of governance and then reshape the entire ecosystem on this basis, making them adaptable to each other, so that the governance process is strong enough and the decisions required are simple enough.

These two can be combined in reality and eventually become a paradigm, the users, the ecosystem, the community, the actual decision-makers. Although the ideal situation is that they don't need to make decisions at all, if you really want to eliminate disputes, politics doesn't work in a large DAO environment, and the key to eliminating disputes in Endgame is to record everything.

This is a pattern, as long as the system is simple enough, we can try to make decisions in advance because there are fewer variables. You need to make decisions in advance under assumed circumstances, rather than when there are specific people or issues, etc. Because if it involves specific people, the entire political world will instantly influence the decision, but if you establish rules in advance, you can apply the rules fairly.

Another key point, which may be the key to the success of Endgame, is that we simplify the ecosystem through subDAO. We break down the current large and complex core system into various independent subDAOs to find answers for every possible hypothetical decision, and we make the core system simpler by segmenting complexity, functionality, and specialization into these independent subDAOs, so the core system only needs to set boundaries around the subDAOs without delving into and micro-managing them, thus eliminating 90% or even 99% of the complexity.

subDAO More Easily Integrates Regional Cultures

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

Rune: subDAO is actually competing for something almost as intangible as air, because the entire industry has almost no value. Looking back at the last bull market and all the hopes and dreams, it's almost embarrassing, as very few people have actually made substantial things. Cryptocurrencies have great potential, but this potential depends on it redefining money, but it has evolved into a problem at the level of money, leading to scammers, and then the entire industry has fallen into a whirlpool of bubbles, rug pulls, scams, and Ponzi schemes, ultimately leading to self-destruction.

The key to subDAO is that they leverage Maker's superpowers, namely patience, actual technical and economic skills, and the ability to do real things. Most importantly, our corporate culture is not about making quick money, but about building a long-term great business, which has greater potential and value than any dirty quick rug-pulling token.

So from the beginning, subDAO combines the flexibility of a startup, not limited by the massive scale and complexity of Maker Core, so they have a lot of room for innovation. We have the best developers and teams who are researching these issues, and they also have huge economic support from the company.

Therefore, even when subDAO is still in the hypothetical stage, I can clearly see that subDAO is the future trend. I think any project that wants to succeed in this field and have the opportunity to expand will adopt some version of the subDAO model. If there is no separate management from the beginning, as a DAO, it can only expand to a certain extent, or it can only become a company, thus giving up decentralization and governance. Now we have further development, and we have shaped the DAO based on market and community signals. We found that subDAO is very good at interacting with communities in various regions, such as Sakura DAO, a subDAO interacting with the Japanese community. It has quickly risen in the Japanese community, and people see it as a way to interact with Maker and utilize what Maker provides, and we can also be effective in more familiar environments.

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 are not interested in games and innovation, but want to create real assets, so we set up a subDAO focused on physical assets and private credit in Southeast Asia, seeking the best physical asset transactions, which cannot be done without on-site investigation.

In fact, not everyone wants to do everything, most people are only interested in a specific area. Previously, in Maker, if you wanted to do what you wanted to do, you had to deal with a whole set of tasks; but with subDAO, people can focus on their areas of interest, those who like deep technical and innovative fields don't need to deal with physical assets, and vice versa. People interested in finance don't like ambiguity, everyone is more satisfied, which will bring higher productivity, more innovation, further reduce struggles in governance, focus more on construction, and bring things to the market.

BlockBeats: Many people think that creating subDAOs may bring more costs, as more people are needed to manage these subDAOs, and you also introduced AI governance tools. Have you considered that this may bring more costs in terms of human resources, or create more tension in governance?

Rune: All of this is based on a principle called "alignment engineering," where every aspect of the system needs to contribute to simplification, reducing conflicts and complexity, and lowering information loss. The reason subDAOs can make things much simpler is that they can fail. So if a subDAO wants to create some dramatic, foolish things, or generate a lot of conflicts, they can indeed do so, and it is acceptable for the entire ecosystem, because their failure will not affect the stability of DAI or other aspects.

BlockBeats: But they do increase costs, right?

Rune: Yes, the key is assuming a single interconnected system, where you find that a part of the system is malfunctioning or has structural risks, and you cannot easily control it, it is possible that the entire system will collapse. In the case of subDAOs, we can limit this problem to a single subDAO, from this perspective, you cannot imagine how much cost such a failure would cause if it were placed in an entire system.

But with a subDAO, we can know how much subsidy we have provided, how much value we have invested. When making this decision, we have already decided the failure cost we can accept, we are actively managing risks, knowing that we are taking the risk of losing this money. It's okay if it fails, because even failure creates value, as understanding how things can go wrong is very valuable data.

In a complex interconnected DAO, you cannot reasonably make these calculations and say, "We are taking some risks, maybe it will cause the entire system to collapse, but we will get some good data." You don't have that kind of confidence; you can only say, "We cannot let the core fail." Because the core is the stable pivot of the DAO. When you are building on a stable pivot and a dynamic DAO based on it, you need to ensure that things will not fail with a completely different level of certainty.

"Escape from Ethereum" After: Solana is Just One Choice

The phrase "Escape from Ethereum" has been the core of the controversy surrounding MakerDAO recently. In the blog, Rune specifically expressed that MakerDAO will re-implement its long-term plan, proposing to create a new chain using Solana's codebase. Rune also listed three reasons he believes Solana's codebase is the "most promising" for exploration by NewChain, including the technical quality and optimization of Solana's codebase, the resilience of Solana's ecosystem after the "FTX explosion," and examples of successful forks like Solana's.

Rune proposed a possible future, where MakerDAO's NewChain will act as a secure bridge between Ethereum and Solana, "providing beneficial impetus for the entire multi-chain economy network effect."

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

What Underlying Technology Does MakerDAO Need

BlockBeats: Regarding NewChain, why did you choose Solana instead of Ethereum, and you mentioned that Maker has a special front end more suitable for Solana's code stack, why not a chain like Aptos or a programming language like Sway? What specific back end does Maker need? Why the need for forking?

Rune: First and foremost, it is highly focused on Ethereum. In the ecosystem, we have five development companies focused on Ethereum, and Maker will fund, trade, and incubate the number of developers focused on Ethereum and EVM, and it will only increase, because Ethereum, EVM, and Layer2 will be the place of choice for all users.

So this is where we build user-facing products. However, to make the subsystems truly effective, to develop them to new heights, and to demonstrate the true potential of blockchain, the key is that they have very advanced token economies, inspired by a lot of content during the DeFi boom, which not only will not collapse, but will be sustainable.

There is a token economy interaction between the sub-agents, similar to Curve and Vaults, where they can compete and cooperate. The problem is that this involves the exchange and distribution of a large number of tokens, and if not operated on an efficient back end, it will pose a certain attack on the system, and will have a negative impact on the content we build and provide for users on Ethereum. So we want to find a high-performance stack to build this back end.

We want to experiment with Solana because it has already proven its high performance in real life. But obviously, what we need is the best technology, and we need to take the time to choose, not just because we were very consistent with Ethereum in the past or because Solana is the latest trend, to choose Ethereum or Solana. We need to truly try, study, and learn, and this takes many years.

For Ethereum and EVM, we will experiment and study to understand the actual situation, and perhaps the results will show that EVM is the most efficient way to build things. Currently, my impression is that EVM is like JavaScript, it is 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 the front-end stuff.

But you cannot build a high-performance back end with JavaScript, otherwise the front-end effect will become worse. So you won't see extremists like JavaScript saying, "You must build the back end with JavaScript." In fact, EVM and Ethereum and its ecosystem and Layer2 will be better if EVM-based products have these specialized high-performance back ends, which will benefit users and develop the ecosystem.

We will show everyone: look, there is real value here. We just need to build, not fight, and I hope the launch of sub-agents can truly open this situation. We will return to the DeFi summer, but this time it will not end, but will continue to develop with sub-agents, and it will not be a bunch of Ponzi schemes, speculation, and sell-offs. It will be tokens with real value, with real use cases, real specialized business models, and they will have this community adaptability from the beginning.

BlockBeats: Is this also true for the ideas you are building in T-Bills and the entire RWA aspect?

Rune: Those will be operated by subDAOs.

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

Rune: Of course, this is just an experiment, so we can learn. We also need to look at other aspects, see how the performance is, and the developer ecosystem around it, in order to truly improve the efficiency of the ecosystem in three years, benefiting the entire industry, and promoting the development of the entire ecosystem. Ethereum, including, is obviously an area we are focusing on, where our users are, and the direction our developers are focusing on.

Rune's New Company: Seeking Interface and Balance with the Real World

BlockBeats: You mentioned that the front end of MakerDAO may not include U.S. users, is this not detrimental to the widespread adoption of Maker?

Rune: If you want widespread adoption, you need to interact with real people in the real world. The existence of cryptocurrencies does not mean that you can be outside of the law and regulation. This has always been one of our key principles over the past eight years: we need to work with regulatory agencies to ensure that we do not do things that may ultimately cause more problems and uncertainty for users. This is our entire concept, we are trying to find a balance between DeFi and the real world, and apply it in a truly effective way.

BlockBeats: Many people choose to work with large institutions, why did you choose to establish another company?

Rune: Yes, we have currently created two companies, and we call them arrangers. The reason we work with more native crypto companies is because of their crypto nativeness, because it is not difficult to find lawyers who can do the job, but it is very difficult to find people who understand both the crypto field and the legal and business aspects.

We are basically pioneers, showing the outside world how to do this work in the right way. Because most projects in on-chain assets and RWA do not understand what projects like Maker are really looking for, what risks and legal certainty are involved. Most products and projects involved in asset tokenization and RWA are driven by engineers, starting with a good idea from one person, and then thinking about how to realize their idea, but not focusing on what users actually need.

The really cool thing about the subDAO model is that it makes subDAOs more flexible in figuring this out, rather than figuring out everything from top to bottom like MakerDAO, it just sets the rough boundaries of what we care about. Then, subDAOs solve complex legal and regulatory issues by having token holders with specialized communities, because they are particularly interested in governing these issues.

Many people in the crypto field do not want to do these things because they are very complex, they actually want to deal with things like the metaverse. Therefore, the subDAO model is very suitable for bringing the right people together, making the entire system very flexible, and using tools, skills, and mindsets to maintain our absolute leadership in real assets is a major advantage.

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