Maker Foundation’s CEO Rune Christensen stepped down this week, leaving a carefully built DAO to run the protocol in his place. The move marks the beginning of a new phase for the lender and arguably for DeFi itself, as the ecosystem’s first dapp transitions into a fully decentralized organization.
“Today, the Maker Protocol is self-sustainable (it generates more revenue than it spends on operations), the governance framework and community is mature, and MKR, the governance token, has been widely distributed,” Nik Kunkel, who heads up the Oracle Core Unit, told The Defiant
First conceived in 2015 — and with its stablecoin DAI released in 2017 — MakerDAO is DeFi’s oldest protocol. With 40% of the $5.49B DAI supply locked in other DeFi protocols, according to MakerDAO’s Growth Core Unit, the stablecoin continues to play a crucial role in open finance.
Core Unit Management
Maker contributors and team member will likely go through a learning curve as they continue to adapt to the DAO-only model, Kurt Barry of MakerDAO’s Protocol Engineering Core Unit told The Defiant.
“When you’re under the umbrella of a centralized company, a lot of things are just handled for you that DAOs don’t do (at least for now). On the other hand, you have a lot more constraints,” Barry said.
Core Units directed by token holders have slowly been taking over the responsibilities of the Maker Foundation throughout the year. The Units each handle an aspect of the protocol’s operations, for example Growth, or Real World Finance. There are seven Units currently, each with their own budget.
Barry’s Core Unit, the Protocol Engineering Unit, was the first to spin out of the Maker Foundation in May. Core Units themselves must be approved by MakerDAO’s governance according to an established framework. For example, The Protocol Engineering Unit’s proposal, which passed through the framework, outlined high-level responsibilities like “ensuring the safety and correctness of the protocol,” as well as more granular ones like “evolve Maker into the primary off-ramp for Optimistic rollups in the Ethereum ecosystem.”
Holders of MakerDAO’s MKR token vote on who will head up the Core Units. Those elected, called Facilitators, oversee their Unit’s budget, which means hiring people and buying services and products to achieve the Unit’s mandate.
“[It] meant being the guinea pig for a lot of new things. The best solutions just weren’t known yet. Overall, though, I’m enjoying the independence immensely,” Barry said of being the first Core Unit to operate outside the umbrella of the Maker Foundation.
The major kinks have been worked out enough so that Kunkel believes Maker has blazed a trail worth following.
“Having responsibilities broken up into autonomous Core Units is a model I think will be widely emulated,” the Oracles Core Unit Facilitator said. “Since Core Units derive their funding from the protocol, it effectively aligns incentives between [them] and the protocol itself.”
Decentralization has always been the end goal for MakerDAO.
And with Christensen stepping down, the time has come for the Maker Foundation to be formally dissolved. According to Christensen’s sign-off post, that’ll happen “within the next few months.”
“It takes a strong leader with integrity like Rune to forgo maintaining control and to stay true to the original vision of MakerDAO. In order for DeFi to truly become antifragile and decentralized, it is imperative that every protocol undergo this transformation into a DAO,” said Kunkel.
The Maker Foundation was a centralized entity tasked with upholding MakerDAO’s five core principles — which include scientific governance and serving the underserved to name a few. “The Maker Foundation is tasked with bootstrapping the system to ensure that it can survive as a fully decentralized organization,” MakerDAO’s community document reads.
Christensen intends to stay on as a community member and participant in Maker’s forums, where potential proposals are discussed.
Kunkel, for one, is optimistic for the protocol’s decentralized future, saying “It’s incredibly exciting to return to the DAO as the Oracle Core Unit Facilitator. I feel as motivated and optimistic for the future today as I did the first day I joined the DAO almost five years ago.”
MakerDAO’s fate is now in the hands of its governance system, the MKR holders and the Core Units, which must execute voters’ will effectively.