About

Maker is a self-described “Multi-Collateral Dai (MCD)” lending protocol designed “to bring stability to the cryptocurrency economy.” To achieve this, Maker employs a two-token strategy - MKR and DAI. MKR is the protocol’s governance token used to vote on various aspects of the protocol, such as technical upgrades, risk parameters, and collateral types. In contrast, DAI is the protocol’s collateral-backed stablecoin soft-pegged to the US Dollar (USD). Minting DAI via Maker entails over-collateralizing a loan with assets approved by MakerDAO via the protocol’s governance mechanism.

History

The idea of Maker was first introduced on March 26, 2015, when Rune Christensen published “Introducing eDollar, the Ultimate Stablecoin Built on Ethereum” with the goal of creating a permissionless credit system that would allow users to take out loans collateralized by crypto assets.

On Dec. 10, 2017, Maker’s original whitepaper, “Dai (now Sai) Stablecoin System,” was published. The system utilized Collateral Debt Position (CDP) smart contracts with ether (ETH) as the only acceptable form of collateral, resulting in the name Single-Collateral Dai (SCD), or Sai. While SCD proved effective, the goal was eventually transitioning to Multi-Collateral Dai (MCD), allowing other forms of collateral to be used.

On Nov. 18, 2019, the protocol was upgraded to MCD, with Basic Attention Token (BAT) being voted as the second collateral available. In addition to allowing new forms of collateral, MCD also introduced (i) the DAI Savings Rate (DSR), allowing tokenholders to earn yield by depositing DAI into a “Pot” that employs various DeFi strategies, and (ii) Collateral Auctions, creating a competitive market in the event of liquidations.

Notably, Maker was originally built by Maker Foundation, which controlled the protocol’s contract at launch. However, on March 25, 2020, the foundation transitioned control to MakerDAO, a decentralized autonomous organization composed of MKR tokenholders.

A governance proposal was launched in March 2021 to onboard real-world assets (RWAs) to Maker Vaults. Several types of RWAs have been integrated, including but not limited to real estate loans, freight invoices, and silver. In addition, a forum discussion was initiated on Sept. 7, 2023, that contemplated using ~$100.00 million to explore ways to offer tokenized T-Bills. As of January 2024, no further actions have been taken toward bringing T-Bills onchain.

The project team ratified universal governing laws, named the “Atlas Immutable Alignment Artifacts,” for the Maker ecosystem on March 27, 2023, in preparation for continued decentralization. On May 12, 2023, MakerDAO announced the release of a five-phase roadmap for the project. Per a forum post by Rune Christensen, the new roadmap, dubbed “Endgame,” will be rolled out as follows:

• Phase One (Beta Launch) - This phase will introduce a full rebrand of the project, establishing a unified brand for DAI and Maker while launching two new tokens codenamed “NewStable” and “NewGovToken.” In this phase, DAI and MKR will not be phased out, although users will be able to upgrade both tokens for “NewStable” and “NewGovToken,” respectively. “NewGovToken” will also include a redenomination from the MKR token supply at a rate of 12,000:1.
• Phase Two (SubDAO Launch) - This phase will introduce six SubDAOs funded by “NewStable” token emissions. These subDAOs will represent decentralized and specialized divisions of MakerDAO, bringing greater governance efficiency to the ecosystem. SubDAOs will be categorized as “FacilitatorDAOs” and “AllocatorDAOs,” with each subDAO having a unique governance process to enable specialization and independent decision-making.
• Phase Three (Governance AI Tools Launch) - This phase will introduce AI Governance tools that will modify, improve, summarize, and interpret “the Atlas,” a governance rulebook containing all governance processes within the ecosystem. Another notable addition will be Aligned Voter Committees (AVCs), which will enable tokenholders to access governance and AI tools to make more informed governance decisions.
• Phase Four (Governance Participation Incentive Launch) - This phase will introduce the Sagittarius Lockstake Engine (SLE) to promote user participation in governance by unlocking “NewStable.” Six farms for SubDAO tokens will also be introduced, where users will earn (farm) “NewGovToken” while participating in SubDAO governance. Notably, users (i) with IP addresses from the United States or (ii) using VPNs will be prohibited from farming these SubDAO tokens.
• Phase Five (NewChain Launch and Final Endgame State) - The fifth and final phase will introduce the release of a blockchain that will house all backend logic for SubDAO tokenomics and MakerDAO governance security. Once the chain launches, “MakerDAO will permanently enter the Endgame State where further major changes are impossible, and it’s core processes and balance of power remain decentralized, self-sustainable and immutable forever.” Rune Christiansen created a forum post on Sept. 1, 2023, suggesting that NewChain would be best created by forking Solana’s source code, with Cosmos as the next best option. A commercially reasonable search found no other information regarding the development of NewChain.

As of January 2024, the features in the Endgame roadmap are still under development and are expected to begin rolling out in early 2024. To this end, MakerDAO approved two proposals (MIP102c2 SP20 and MIP102c2 SP21) that serve as amendments to the Alignment Artifacts in preparation for the beginning of Phase One. However, no additional timeline was given for the start of Phase One. Additional details regarding Maker’s roadmap can be seen here.

As of the same date, Maker and the MKR token are fully operational, and Core Units elected by MakerDAO are responsible for operating as the protocol’s “next-generation workforce.”