Andreessen Horowitz (a16z), a venture capital firm, disagrees with the founder’s plan to divide MakerDAO into smaller units.
A16z outlined its own vision for the protocol’s future, countering some of MakerDAO founder Rune Christensen’s points in his “Endgame” manifesto on how to make Maker more decentralised and resistant to censorship.
Maker allows users to automatically withdraw and lending cryptos, effectively making it a cornerstone of DeFi. Additionally, it issues DAI — a $6 billion decentralized stablecoin backed by $7.8 billion in investor-locked assets.
The decentralized autonomous organization (DAO) platform is regulated by blockchain-based protocols and votes from maker (MKR) token holders, who dispute all ideas and decisions in the protocol’s forum. A16z has considerable MKR token holdings as an investor, giving them voting rights and sway over which proposals will ultimately be approved.
The platform is undergoing changes, and the argument over whether to prioritize decentralization above accelerating expansion raises a fundamental challenge for crypto protocols.
According to Messari analyst Dustin Teander, MakerDAO is presently debating whether to expand the protocol or fortify it against regulatory issues. He added that decentralisation obviously must play a role, but a small, decentralised product does not address the market problem for those who require it.
Porter Smith, a partner at a16z, wrote a note proposing improvements that will strengthen decentralization without hindering growth and adhere to the existing legal and regulatory framework. This involves improving the present Core Unit-based system rather than fragmenting the protocol’s governance structure into smaller entities known as MetaDAOs.
The note also states that A16z would facilitate “experimentation through smaller, self-contained proposals to get a baseline for how proposed changes might work (or not) in practice.”
MKR holders have the choice of voting on two proposals that would reform MakerDAO, possibly dividing the protocol’s management units into separate MetaDAOs. At the time of publication, surveys indicated that over 90% of voters were in favor of the formation of MetaDAOs at the cost of Core Units.
In May, MakerDAO’s founder Rune Christensen released the Endgame plan, an ambitious roadmap for the protocol’s future that aims to make it legitimately decentralized and resilient to any potential encroachment and restriction from authorities. His plan involves allowing DAI to float freely and removing centralized assets from reserves that could theoretically be blacklisted or confiscated.
However, in the brief term, MakerDAO contributors backtracked on growth and elected for the protocol’s reserves to include real-world assets including $500 million of government-issued treasury bonds in an effort to profit from yields and incorporate incentives for MKR and DAI holders to bring in newcomers.
Opposing parties in the governance of the protocol have been at odds at least since early summer, when investors and founders disputed during a vote on the lending oversight unit of the protocol.
