MakerDAO is undergoing a significant transformation called Endgame, a roadmap to decentralize governance and improve innovation.
Endgame consists of 14 Maker Improvement Proposals (MIPs), each designed to create rules and frameworks for the new governance structure. The first MIP voted on by the community was the Maker Constitution, also known as MIP101.
These are the 14 proposals that make up the entire Endgame.
Phases of Endgame
The five phases of Endgame are a roadmap proposed by MakerDAO co-founder Rune Christensen to decentralize governance and improve innovation at MakerDAO, the decentralized protocol behind the stablecoin DAI and the governance token MKR.
Let’s explore each in detail.
Phase 1 will involve the following changes:
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A complete rebrand to unify the DAI and Maker brands and create a new identity for the MakerDAO ecosystem.
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The introduction of two new tokens with updated features: NewStable and NewGovToken.
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NewStable is an ERC20 wrapper with the same features as DAI but with additional benefits such as flash minting, interest-bearing, and complete 1:1 conversion to DAI.
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NewGovToken is a new version of MKR but with a higher supply and a deflationary mechanism that burns LP tokens for NewStable against NewGovToken using protocol surplus.
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The preservation of Dai and MKR in their current form, but with a governance backend that operates through a secure bridge to Ethereum.
The purpose of Phase 1 is to improve the scalability and efficiency of the Maker Protocol by upgrading its architecture and deploying AI tools to optimize various processes.
Phase 2 will involve the following changes:
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The launch of six SubDAOs, smaller DAOs that will have their governance tokens and determine charities to donate to through community votes.
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The introduction of NewStable farms, which are liquidity pools that allow users to stake their NewStable tokens and earn rewards in the form of SubDAO tokens.
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The activation of the Smart Burn Engine will accumulate and burn LP tokens for NewStable against NewGovToken using protocol surplus, creating deflationary pressure on NewGovToken.
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The creation of a Purpose System, which will enable token allocations to SubDAOs based on their social impact and alignment with MakerDAO’s vision.
The six subDAOs are categorized under these two:
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FacilitatorDAO: Responsible for facilitating the governance process and ensuring all parties follow the Maker Constitution.
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AllocatorDAO: Responsible for allocating funds to various projects and initiatives that support the MakerDAO vision and mission.
While there’s very little information about what these 6 subDAOs will be, each SubDAO will have its own governance token that can be earned by staking NewStable tokens in the corresponding NewStable farm.
The SubDAO tokens will also have voting rights and influence over the SubDAO’s decisions and actions. The SubDAOs will operate independently or in conjunction with the main DAO, depending on the situation and the purpose.
The purpose of Phase 2 is to enhance the governance mechanism of MakerDAO by creating a more diverse and resilient ecosystem of SubDAOs that can operate independently or in conjunction with the main DAO.
Phase 3 will involve the following changes:
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The launch of several internal AI tools to optimize governance tasks such as monitoring, data siloing, risk assessment, and voting.
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The creation of The Purpose Fund will promote and fund free, open-source AI models and tools for socially impactful industries and projects.
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Integrating real-world assets (RWA), such as real estate and stocks as collateral types for the Maker Protocol, expands its use case and adoption.
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The development of Alignment Artifacts, which are AI-generated summaries of governance proposals that help users understand the pros and cons of each option.
The purpose of Phase 3 is to leverage the power of AI to enhance the efficiency, resilience, and participation of the MakerDAO ecosystem. It will also support open-source AI development and social impact projects that use NewStable or NewGovToken to create positive change in the world.
Phase 4 will involve the following changes:
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The development of an incentive program for ecosystem participants called the Governance Participation Incentive (GPI).
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The GPI will involve gamification and rewards to incentivize interactions on the MakerDAO platform, such as voting, delegating, staking, and providing feedback.
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The GPI will use the Sagittarius Lockstake Engine (SLE), incentivizing users to lock up NewGovTokens and delegate voting power.
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The SLE will also enable users to earn NewStable income or SubDAO tokens as rewards for their participation in securing the governance process.
The purpose of Phase 4 is to increase user engagement and participation in governance by creating a positive feedback loop and aligning incentives. It will also foster a more diverse and active community that can contribute to the MakerDAO vision and mission.
Phase 5 will involve the following changes:
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The creation of a proprietary blockchain currently referred to as NewChain.
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NewChain will host all backend logic for SubDAO tokenomics and MakerDAO governance security.
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NewChain will be bridged to Ethereum, meaning NewStable, NewGovToken, Dai, and MKR will continue functioning normally on Ethereum.
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NewChain will be protected by a governance backend that operates through a secure, state-of-the-art bridge.
NewChain is a proprietary blockchain that MakerDAO plans to create in Phase 5 of Endgame, the final stage of its roadmap to decentralize governance and improve innovation. According to the official forum post, NewChain will have the following features:
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NewChain will host all backend logic for SubDAO tokenomics and MakerDAO governance security.
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NewChain will be bridged to Ethereum, meaning NewStable, NewGovToken, DAI, and MKR will continue functioning normally on Ethereum.
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NewChain will be protected by a governance backend that operates through a secure, state-of-the-art bridge.
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NewChain will enable greater scalability and innovation for the MakerDAO ecosystem by optimizing performance and security.
The purpose of Phase 5 is to finalize the Endgame governance and tokenomics of MakerDAO and SubDAOs by creating a dedicated blockchain that can optimize performance and security. It will also enable greater scalability and innovation for the MakerDAO ecosystem.
Questions Raised By the Community
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Isn’t transitioning Dai to a NewStable token going to fragment liquidity and give up the vast amount of integrations and brand power Dai has accomplished?
That’s a valid concern, but the transition will not fragment liquidity or give up the integrations and brand power of DAI:-
Dai will remain the undisturbed OG stablecoin with no flashy features, and the complete 1:1 conversion to NewStable will always bootstrap its liquidity.
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NewStable will be an ERC20 wrapper with the same features as DAI but with additional benefits such as flash minting, interest-bearing, and complete 1:1 conversion to DAI.
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NewStable will be compatible with all existing DAI integrations and protocols and enable new use cases.
Therefore, the transition will not harm the existing ecosystem of DAI but rather enhance it and expand it with new features and incentives.
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Why will USA IPs and VPN users be geo-blocked from accessing all forms of farming and yield opportunities of NewStable and NewGovToken?
The US has a complex and uncertain legal and regulatory environment for crypto and DeFi projects, especially for DAOs and stablecoins. Because of the legal and regulatory risks involved, the US authorities:-
have shown a hostile and aggressive attitude towards crypto and DeFi projects, such as launching investigations, lawsuits, and enforcement actions.
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have the power and jurisdiction to seize assets, freeze accounts, impose sanctions, and extradite individuals involved in crypto and DeFi projects.
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have the influence and leverage to pressure other countries and entities to comply with their demands and policies.
Therefore, US-based entities and addresses are excluded from the Endgame to protect the MakerDAO ecosystem and community from potential legal and regulatory threats. This is a precautionary measure to ensure the security and sustainability of the project.
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How will the AI tools be developed and deployed, and what are the ethical and security implications of using AI for governance?
The AI tools for governance will be developed and deployed in Phase 3 of Endgame, the third stage of MakerDAO’s roadmap to decentralize governance and improve innovation. The AI tools will:-
be used to optimize governance tasks such as monitoring, data siloing, risk assessment, and voting.
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include Alignment Artifacts, which are AI-generated summaries of governance proposals that help users understand the pros and cons of each option.
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also include AI Oracles, which are AI models that provide reliable and unbiased data feeds for the Maker Protocol and SubDAOs.
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be developed by MakerDAO’s Innovation DAO (MID), one of the six SubDAOs launched in Phase 2 of Endgame.
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be funded by The Purpose Fund, which will promote and fund free, open-source AI models and tools for socially impactful industries and projects.
The ethical and security implications of using AI for governance are complex and challenging. Some of the implications are that the AI tools may:
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introduce new risks and vulnerabilities, such as hacking, manipulation, bias, or errors.
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raise ethical and legal questions, such as accountability, transparency, privacy, or consent.
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affect the human agency and autonomy of the users and stakeholders, such as reducing their involvement, influence, or trust.
Therefore, developing and deploying AI tools for governance will require careful design, testing, and evaluation to ensure their quality, reliability, and security. Clear and consistent ethical principles and guidelines will also be needed to ensure fairness, accountability, and transparency. It will also require constant feedback and communication with the users and stakeholders to ensure their satisfaction, participation, and empowerment.
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How will Endgame affect the tokenomics and value proposition of MKR and DAI?
Endgame will affect MKR and DAI's tokenomics and value proposition in several ways. According to the official forum post by Rune Christensen and other sources, some of the effects are:-
MKR will be replaced by a new version of MKR, called NewGovToken, which will have a higher supply and a deflationary mechanism that burns LP tokens for NewStable against NewGovToken using protocol surplus.
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NewGovToken will be the governance token of MakerDAO and SubDAOs and will have voting rights and influence over the decisions and actions of the ecosystem.
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NewGovToken will also be used as collateral to generate more NewStable tokens, creating a positive feedback loop and increasing the demand and value of NewGovToken.
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NewStable will be compatible with all existing integrations and protocols that use DAI and enable new use cases.
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NewStable will also be used to stake in NewStable farms, which are liquidity pools that allow users to earn rewards in the form of SubDAO tokens.
Therefore, Endgame will enhance the tokenomics and value proposition of MKR and Dai by upgrading their features and functions, creating new incentives and opportunities, and expanding their use case and adoption. It will also preserve their existing ecosystem and brand power while preparing them for the future direction of MakerDAO.DAI integrations and protocols
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MakerDAOs Endgame is an ongoing discussion, and I’ll keep updating this blog as and when new updates have been released.
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