MakerDAO

What is MakerDAO?

MakerDAO is a decentralized organization dedicated to bringing financial stability and transparency to the world economy. MakerDAO is the community behind the Maker Protocol, which enables the generation of Dai, the world’s leading decentralized stablecoin. The Maker Protocol, the set of smart contracts that make Dai possible, is run by the decentralized governance community of MakerDAO. The Maker Protocol, as one of the largest decentralized applications (dapps) on the Ethereum blockchain, was the first decentralized finance (DeFi) application to earn significant adoption. All Dai is backed by a surplus of collateral that has been locked into audited and publicly viewable Ethereum smart contracts. Anyone with an internet connection can monitor the health of the system anytime at daistats.com or through other third party tools.

Who Started MakerDAO and When?

The idea of MakerDAO became public on March 26th, 2015 with Rune Christensen’s post, Introducing eDollar, the ultimate stablecoin built on Ethereum, on the r/ethereum subreddit.

Why did the founders call it _Maker_DAO?

The term "Maker" is from the term Market Maker. This was driven in part based upon BitUSD's inability to attract market makers, which resulted in its lack of robust liquidity. One original idea was to distribute MKR specifically to crypto market makers, which we later started calling keepers, to ensure they were incentivized in the system and would help bootstrap its liquidity.

What does DAO mean?

DAO stands for ''Decentralized Autonomous Organization.'' In the context of MakerDAO, a decentralized governance community manages the Maker Protocol through an embedded governance mechanism. The organization is made up of all MKR token holders, vocal community members, and ecosystem stakeholders. MKR holders have the sole authority to enact changes to the system through on-chain voting. It is decentralized because no single party has full control over the system. It's autonomous in that, once deployed, the Maker Protocol facilitates its own governance through the built-in governance mechanism and the existence of MKR.

Who is the Maker Community?

The Maker Community is the wide world of people and organizations that use or support Dai. In short, the Maker Community is MakerDAO. From early adopters to Maker Foundation Employees to MKR holders, the Maker Community is an indispensable and critical part of the Maker system.

What is the Maker Foundation, and how does it relate to MakerDAO?

The Maker Foundation is tasked with bootstrapping the system to ensure that it can survive as a fully decentralized organization. The Maker Foundation employs people to develop the strategies and manage the tasks required to build enough momentum so that MakerDAO can successfully thrive on its own. Per the Foundation Proposal, decentralization is a top priority and is ongoing. The Maker Foundation is responsible for regular updates on progress being made toward decentralization.

Though the Maker Foundation is part of MakerDAO, in that it’s part of the community, the Maker Protocol itself is managed through the voting power of MKR token holders. It’s important to note that the Foundation does not occupy a privileged position within the community.

Does the Foundation Vote in MakerDAO Governance?

No. The Foundation is prohibited by its corporate charter from voting in MakerDAO governance.

Will the Maker Foundation exist indefinitely?

No; the Maker Foundation plans to dissolve when MakerDAO becomes self-sustainable. For the time being, the Foundation will continue to bootstrap aspects of governance until the DAO reaches full decentralization. Read more about the lead up to fully decentralized governance here.

What are the primary focuses of the Maker Foundation?

The primary areas of focus are:

  1. Governance Development and Contributions to System Maintenance: push MakerDAO to become self-sustaining through initiatives such as the Maker Improvement Proposals); support the current governance user interface (though any community member can build their own governance UI and should be encouraged to do so); system maintenance; educating regulatory agencies and members of government in various jurisdictions about the Maker Protocol and decentralized finance.

  2. Oasis: A reimagined and rebuilt Oasis supporting the MakerDAO ecosystem. It will be a place where people can trade a multitude of collateral assets that back Dai, while conveniently accessing Vault features for all of these assets; in addition to a convenient place for Dai holders to access the DSR.

  3. Eliminate informational asymmetries with the Maker Community: The Foundation will continue to contribute information from our teams to educate Dai market makers and MKR holders about day-to-day activity in Dai markets. This step is mission-critical for two reasons: one, we want other actors, specifically MKR holders, to see important trends that may foreshadow the need for MKR votes; and two, we want our team to be one voice, among many, providing reliable market information to the Maker Community.

Where does The Maker Foundation get funding from?

The Maker Foundation has sold MKR tokens from its treasury to a limited number of strategic partners, including a16z and Paradigm Capital, who contribute to MakerDAO governance.

Who controls the Development Fund?

The Development Fund is held in a multi-signature wallet owned and managed by the board of the Maker Ecosystem Growth Foundation.

What are the plans for the Development Fund?

The plan is to fully distribute the holdings of the Development Fund in the coming years, thus fully decentralizing the ownership of MKR tokens.

Is MKR in the Development Fund used to vote in Maker Governance?

No. The Foundation is prohibited by its corporate charter from voting in MakerDAO governance.

What is the legal structure of The Maker Foundation?

The various entities associated with the Maker Foundation are currently held under the Maker Ecosystem Growth Foundation (MEGF), a Cayman Islands foundation company limited by guarantee. As a group, these entities are referred to as The Maker Ecosystem Growth Group (MEGG). See the February 2019 Introducing the Maker Ecosystem Growth Group blog post for more details.

How do I distinguish between the DAO and the team who is developing and bootstrapping MakerDAO?

MKR token holders are all members of MakerDAO. At times, this creates an overlap between the DAO and the Maker Foundation because many Maker Foundation team members are MKR token holders themselves (and many of them were MKR holders and supporters before joining the Maker Foundation). That said, the Maker Foundation does not control, participate or vote in MakerDAO governance. MKR token holders alone decide what happens to the Maker Protocol. Moreover, all interested parties may publicly submit their opinions related to MakerDAO governance.

What is the Dai Foundation?

The Dai Foundation is based in Denmark and is independent of the Maker Foundation. The independent and self-governing Dai Foundation was formed to house the Maker community's key intangible assets, such as trademarks and code copyrights, and it operates solely on the basis of objective and rigid statutes that define its mandate. Its purpose, as noted in the Dai Foundation Trust Deed is to safeguard what cannot be technologically decentralized in the Maker Protocol.

See the December 2019 Announcing the Dai Foundation forum post and the December 2019 The Maker Foundation Transfers Trademarks and Software IP to Independent Dai Foundation blog post for more details.

Who is on the Board of Trustees of the Dai Foundation?

Initially, half of the Dai Foundation’s board comprises external and independent board members, whilst the other half of the board is made up of private individuals related to the Maker Foundation.

  • Søren Peter Nielsen, Chairman, Head of Product at Maker Foundation

  • Jacek Czarnecki, Deputy Chairman, Global Legal Counsel at Maker Foundation

  • Hans Henrik Hoffmeyer, Co-founder of Coinify

  • Michael Dunworth, Co-founder of Wyre

  • Payam Samarghandi, Attorney at Law at Horten Law Firm

  • Wouter Kampmann, Head of Engineering at Maker Foundation

As such, the Dai Foundation is initially set up to ensure that the independent board members have the necessary understanding of the Dai system and its mechanisms. Over time, the board members affiliated with the Maker Foundation will be replaced by independent board members.