DAPPCON 2018: Maker - What’s to Come - Matt Richard (MakerDAO)

Transcript

I'm Matt with maker and I'm here to talk to you about what it is that we're up to so there's a lot to cover here in the next 20 minutes and our system is quite complex I want to spend a few minutes just going over the basics of what maker is comprised of and why you should care before getting into the good stuff okay so apologies to those already in the know feel free to fiddle on your phones for the next six minutes or so I won't mind and I will let you know when we get to the new info maker is a decentralized autonomous organization built on the dye credit system we started this journey over three years ago and currently

employ over 70 people around the world dye is a hard currency because it's backed by the equivalent of more locked assets than those that are in circulation it's permissionless which means that it's unstoppable anyone anywhere can use it at any time the first way to interact with the dye credit system is for stability seekers looking to hedge out of more volatile assets or for a safe secure store value or unit of account on chain these users are going to hold and use dye the second and third reasons one would interact

with the dye credit system is via what we call a collateralized debt position or CDP for short both of these use cases are speculative and are dependent on the creator having faith in the future value of the asset they are depositing into the CDP for example if you hold aetherium or in the future virtually any asset that can be tokenized you can deposit your token into a CDP and take out a loan against that collateral if the price goes up you profit from the continued holding of that asset while at the same time you're able to utilize the cash that you removed from the CDP so that you can do whatever you needed to do with it

some CDP owners have already used CDP's to hold their eath while paying their bills buying a new car and some of you can bought a house with that cash from a CDP the last use case for CDP's is low counterparty risk margin trading currently if you want to increase your exposure to an asset like aetherium it's necessary to trust the exchange redeposited your funds to not get hacked or run off with your funds with CDP's you never lose custody of your funds and you can increase your exposure in excess of 3x today so you can see here a timeline for diets been out since 2016 we're currently in beta and we're very

excited to launch multi collateral in the third quarter so the current version of died in the wild calling it beta because it's single collateral which means that if a Black Swan were to occur and the price of eath was to drop instantaneously across all exchanges at once to to zero for more than an hour then dye would fail the multi collateral version of dye is due to be released later this quarter and will be resilient even in the face of such an event because the collateral pool will be diversified with non-correlated assets this means that even if one collateral type fails completely that dye holders will still be made whole because all

CDP's in which the dye were created are all over collateralized so you might have asked yourself how the marketplace or the market cap were scale when only ERC 20 tokens are going to be used as collateral the process will be relatively slow going at first but before you know it anything and everything that can be represented with a token can and will be including and especially assets in the physical world this is because the inertia of increased efficiency fungibility and introduction of subsequent discrete price discovery will push owners of these assets to tokenize them to reap the benefits and

the Associated profit things like bundled real estate securities commodities and then novel assets like tokenized individual is invoices and eventually yourself just as you can go to the bank today and get a loan against your future productive value in the future you will be able to do the same with CDP's home mortgage is the best known example of equity financing and customers will benefit from the efficiency and low costs associated with equity loans based on tokenize real estate supply chain financing is also an example of equity financing some of you may have heard

about our partnership with trade shift imagine the amount of dye created just from tokenizing even a fraction of trade shifts hundred billion in yearly turnover for invoices on the supply chain the value proposition of centralized exchanges is there access to stable store value and fiat on and off ramps and sadly for many is still a place to store their crypto with a decentralized stable store of value there is much less need for centralized exchanges to built to fill that void and these three value propositions will disintermediate to favour cold storage wallets decentralized exchanges and low-cost specific businesses that are

focusing on fiat on and off ramps in local currencies remittance companies popped up a few years ago when brit coins sprang out to the scene but have since generally fizzled to the high cost of transactions and instability of the unit of account with dai the cost of transfer is generally speaking quite low and likely to eat be even lower in the future and the unit of account is stable as a result a resurgence of geographically focused remittance companies are going to be popping up charities NGOs and governments are all set for disruption due to the transparency that a stable unit of

account can bring we are exiting the era of accepted opacity and lack of provenance and entering the era when a donor or a taxpayer will demand to know exactly what their donations or tax dollars are being used on consumer lending is going to be disrupted once self sovereign identity is unlocked along with a stable store of value as it can then be tokenized and then can be used as collateral the lower rates found on chain via increased efficiency and credit creation and transparent risk assessment will make it hard for traditional banks and credit card companies to compete we believe that central banking will be disrupted

because citizens will prefer to centralize credit creation and the efficiencies to be found from an open marketplace of risk Assessors using scientific methodology rather than central banking whims and geopolitical forces okay time to put the phones down not that if you're actually using them right now as you can see we're hard at work here at maker and as we scale up the maker foundation the pace of our product development and iteration is accelerating so here's the first part of our project roadmap here's the second don't worry about like getting all this

information I'm going to cover it in depth so here at maker we take smart contract security very seriously and have worked very hard for years to ensure the highest degree of safety possible in our smart contracts with the release of multi collateral we take that commitment to the next level by launching what we believe to be the world's first formally verified decentralized application in multi collateral die so anybody who's interacted with the Daiya dashboard has known the pain associated with doing so but we're very

excited to release 2.0 which is going to have things like ledger and trace or support and will include proxy contracts for getting margin easily and seamlessly the next few slides are unfinished and unpolished screenshots of things that we're working on right now and set to release in the near term this one is a way sis decks 2.0 which is has some UI and back and upgrades with more features coming in 2019 this is a screenshot of the mkr governance dashboard this is where you would go to vote on risk parameters in the system and this is our our auction UI this is

basically for profit profit motivated actors to come and interact with the system and find ways to to arbitrage but most people won't ever see this ok let's talk about governance our governance over in view is being released in three parts the second of which coming out next week on our blog the integrity of the maker doll system the supply of dye and more importantly the stability of dye all depend on affectively managing the risks inherent to the system to avenues of information will be are going to be available to MKR token holders to support their decisions the first is

educational including videos papers and tools the second are forums for debate and resolution using combinations of social media at first but eventually made available through a portal decentralizing risk achieves two purposes first it creates the possibility for methodologically methodologically scientific governance and second it creates a more effective risk function our governance process is split into two separate votes governance votes and executive votes scientific governance is implemented through governance votes at first to acquire resolution then successful executive votes will

implement state changes on the blockchain governance votes can be once-off intermittent to regular whereas executive phots are regular and will be quarterly maker needs to provide more than just a technical upgrade to the financial system it should also revolutionize the role of Finance in the economy die already levels the playing field for the unbanked and small businesses against the incumbents but to truly make an impact we need to go further by ensuring daya becomes a global engine for equality the maker foundation has a amount allocated and amount of MKR from the dev fund that corresponds to 20 percent of the total

supply of mkr to continuously finance charitable initiatives or direct giving schemes that used I as the financial infrastructure MKR voters will directly govern the charitable transactions adding another crucial dimension of altruism to the governance philosophy the 20 percent principle will be funded in a sustainable manner that ensures the charitable transactions will always remain at 20 percent of the system's fees minus expenses distribution of charitable funds will be managed through a process similar to the governance framework the maker foundation will initially lead the community by presenting the best choices available

but over time the process will become decentralized and completely controlled by the community through a framework that is based on data-driven impact analysis we are funding and supporting internally the development of an open source technology that is building an API for the blockchain with make maker API you can get real-time information about the state of the maker system at any time this makes the smart contract data much more accessible getting data from the blockchain is currently very slow and cumbersome versus get getting data from the web maker API will provide a much more web Lake API experience that developers are used to we are also building a JavaScript

library to interact with our smart contracts it will provide a flexible high level API for interacting with our smart contracts specifically CDP's to start it will act as a supplementary way to understand the die credit system and provide a path to building gaps using die and CDP's it will provide JavaScript tooling to the a to the aid the community in developing JavaScript projects interacting with the blockchain in the current this is feeds by the way yeah in our current implementation of feeds we keep everything on chain this means if we have an Oracle with 15 sources we can have up to 15 transactions every

time there's a price change when the network is congested this can mean that price changes are slow to update with the new version our Oracle's don't even have to run in etherium node or have any balance in their accounts the etherium count is used solely as a signing mechanism and once enough signatures are aggregated we can send one transaction to the blockchain that will contain the price data of all the Oracle's making it cheaper to update our prices and faster to since one transaction contains data for 15 Oracle's instead of one per Oracle everything that has a price feed can be represented on chain and backed

by dai the first things that are going to be represented will be Fiat pairs but you can imagine other things in the future that also might be represented so we chose to start out pegged to the u.s. dollar because of market demand but is that really the ideal solution we don't believe so the world's currencies are bound to geopolitical forces the establishment of a stable secure safe digital currency outside of the nation-state which is not bound to whims of geopolitical Ramdin amiss has the potato the potential to be incredibly empowering

for the people of the world by providing stability we are working on an algorithm which is tied more closely to global means of production and consumer price index than to geopolitically dependent Fiat price information and are looking to launch the subsequent version of dye in 2019 at which point we will slowly move to this price reference and away from the dollar if this presentation was interesting for you and you would like to learn more about our upcoming JavaScript release please see Ethan's workshop in an hour you can also go to Diet maker.com is where CD PS can be created and managed you can go to M kara tools to see the current system over

collateralization along with the health metrics of the die credit system we also have a very long list of open positions including ones here in Berlin so if you're interested in working with us please check out our career page thanks everybody for your time and attention you