Reaching a Compromise on the 20% Principle and the Foundation Proposal
The Maker Foundation recently started the process of decentralized governance. It’s a new field with few precedents to draw upon, as a result we have to navigate it as best as we can and refine as we go along. We believe the key to successful decentralized governance is to seek consensus and foster an iterative process that learns over time and properly integrates the knowledge and perspective of the community.
It was immediately apparent that the 20% Principle was controversial. In fact, it dominated conversations about the Foundation Proposal, with some community members arguing against it. Because of this, we are adjusting the Foundation Proposal based on this feedback.
The argument that seemed to resonate the most with the community was that it was too early for MakerDAO to move beyond its core focus, when we still need to tackle critical challenges within our own system and community, such as how to reach mass adoption. It’s a fair point and we understand how community members could be skeptical about the Foundation not being laser focused on its role as the driver of growth in the wider ecosystem.
For that reason, we’ve decided to modify the Foundation Proposal. Specifically, we will replace the 20% Principle (i.e. the hard commitment of 20% of MKR allocated to charity) with a new principle that we believe everyone in the community can support: Serving the underserved.
Serving the underserved means that our approach to Dai adoption in emerging markets recognizes the opportunities presented by the inequalities in the global economy. By aligning with the idea of a “triple bottom line” we obtain growth and adoption for Dai while also seeing our network have a profound positive social impact on the world in a sustainable and organic manner, while remaining profitable. We believe the unbanked, the underprivileged, and the financially disenfranchised will immediately benefit from economic inclusion and quality of life by giving them access to the global financial ecosystem through the use of Dai as predictable and stable unit of account. They are also a new and untapped market with a very low cost-to-acquisition.
The Maker community will pledge to explore and pursue every profit opportunity that is based around leveling the global economic playing field while benefiting from fixing the inefficiencies caused by inequality, both when it comes to risk assessment of collateral, and also in spreading Dai adoption. As always, the Maker Foundation will support the community with data and decision making material through the application of the scientific governance process.
We will also explore the idea of direct Dai distribution as a means of adoption in the future, once Maker has reached a new level of growth. Some of those required growth milestones will include sufficient infrastructure around the project and the right partners on the ground which provide crystal clear proposals and metrics. Robust impact analysis will help the community in giving actionable signals if the project works, paving the way for an increasingly adventurous Dai distribution program, that is always done in such a way that both the net growth of the maker ecosystem and net value is prioritized.
At this time, however, we believe it is best to use the Foundation Proposal to confirm the community’s interest in serving the underserved and to explore the opportunities this presents.
This way we don’t compromise an inch when it comes to growth and scaling while empowering the community to be able to do more social good in the long run.
When the community and the Foundation revisits the question of charitable giving, it will be with the goal of significant Dai adoption and Maker growth, and at a time when Maker has a much stronger, more mature governance framework and economic independence.
Because this is a major change to the Foundation proposal, we want to make sure the community is given enough time to review and process the changes.
The new timeline will be:
- August 20: An updated, full version of the Foundation Proposal that includes the Serving the underserved principle will be released.
- September 12: The Foundation Proposal vote will take place.