MakerDAO moves to formalize governance process with new constitution

MakerDAO moves to formalize governance process with new constitution

The recently approved constitution provides a basic set of rules for the DAO’s Scope Frameworks and its Endgame plan.

On Monday, the MakerDAO community passed a proposed MIP (Maker Improvement Proposal), MIP101, which outlines a "Constitution" for the DAO. The proposal sought to establish foundational principles and guidelines that would govern the MakerDAO ecosystem and help ensure its long-term sustainability.

Written by Maker founder Rune Christensen, the proposal argues that the protocol’s “reliance on human input can expose weaknesses and vulnerabilities that can result in the failure of the Maker Protocol or the loss of user funds,” hence, the need for a constitution. The constitution is designed to provide as much resilience as possible “into the political and operational interactions and processes that occur in Maker Governance,” ultimately preventing risks such as governance takeover or theft of Dai collateral.

The governance document is divided into several sections, each addressing a specific aspect of the platform's governance. For example, Section 1 outlines the principles that govern the MakerDAO ecosystem, such as the purpose of the DAI stablecoin, the core values of the DAO, and its commitment to public good.

The constitution also outlines several categories of participants with different roles and responsibilities. In Section 4, Constitutional Conservers (CCs) were defined as “external entities” whose job was to facilitate and protect the Maker Governance process by ensuring that the constitution is followed by other participants. Entities with this role will be able to become constitutional voter committee members (CVCMs) or constitutional delegates (CDs) during the pregame.

That said, while the CVCMs create position documents for voters to consider, CDs manage smart contracts that enable MKR holders to delegate their tokens without forfeiting custody.

Looking at the results from the on-chain governance, a little over 76% of the MKR votes were in support of the constitution. The proposal received dissenting votes from less than one-fourth (23.95%) of the MKR voters, with 0.01% choosing abstain. One of the voters who backed the idea said:

From this constitution, I have finally got a good starting point to grab whole view of next governance structure of MakerDAO. This constitution is recommended as must-read for all participants of MakerDAO that would like to have whole view of next governance.

Despite the relatively massive support the initiative enjoyed, some Maker users have stepped forward to criticize the constitution as being authoritarian. A pseudonymous Twitter user known as PaperImperium opined that the document forces users to be “muzzled and forbidden from communicating with anyone at or around Maker about Maker.”

Ultimately, the recently approved proposal brings MakerDAO an inch closer to what Christensen described as the “Endgame Plan” for the protocol. As part of the plan, the current structure of the MakerDAO would be dismantled and replaced by smaller self-sustaining entities called SubDAOs. These entities would function autonomously and possess their own tokens within the MakerDAO ecosystem.

Endgame also seeks to increase platform revenues by utilizing a portion of Maker's reserves (more than $7 billion) to invest in real-world assets and money-market funds. Additionally, the plan aims to enhance the decentralization of the backing of the DAI stablecoin, making it more resilient against censorship and sanctions.

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