Fireside Chat with Rune Christensen: Shaping MakerDAO's Endgame & the Path Ahead

all right uh so happy to have uh room here with us today I've been a big fan for many many years um since almost the very beginning uh all right so uh today we're going to be uh I'm going to be asking run about uh a lot about the end game and the next 10 years for both maker and for die uh so I want to first ask R about Dice and gim um we'd love to hear your vision on how D can help us break out of the current monetary regimes not only for the crypto Savvy but also for the billions of ordinary people in emerging markets in the global South today our most familiar Glo uh Global unit of account is the US dollar we think communicate quote and transact in US dollar denomination and are in this sense traed inside the US dollar economic regime just like your mother tongue might be Danish and mine is Chinese but we've always spoken English at Global events like this since the greatest uh the Great British Empire habits die hard and switching costs have been prohibitively high to me the vision of die eight years ago was to create a neutral unit of account that allowed us to still think communicate and transact in dollar denomination but to have this crypto money that actually isn't the US dollar at all it's reserved by onchain assets controlled by neither the us nor any government it liberated us from the US dollar and offered people an important option it provided an easier way to break out of the US dollar regime it enabled breakthrough censorship resistance and financial sovereignty it it enabled money Innovation and competition it was a trojan horse into trafi today maker is the largest def5 protocol maker Dow is the largest da and Z is the largest defi stable coin maker Dow's very successful introduction of rwas has further enhanced th's collateral heterogenity however this may also reduce th resistance to government censorship and seizures what di enin as a decentralized money is it crypto dollar a neutral censorship resistant unit of account that allows to allows people to break away from the US dollar regime and use the dollar as only a unit of account is it a dow operated digital US dollar that leverages alignment engineering and tokenomics to grow an ecosystem system offering drastically enhanced transparency and immutability what is the end game for D thanks that was a good overview of uh yeah many many of the different uh factors that have been really playing into makers and D history over all these years uh and even I mean it's interesting that you're reaching all the way back to this like very early Theory and I would say ideology that that actually started maker off um which itself was rooted in projects like bitshares that fundamentally themselves were then ties all the way back to like the very early OG Bitcoin philosophy right and the Bitcoin white paper and that whole shebang basically but you know so obviously um a lot has changed in crypto in the last eight is it eight years now I don't know the very very many many years way too many years that we've been uh going with maker and I think well well so I mean the one thing that b is true uh I mean was through all the way back in the beginning and and and continues to be sort of what what has been guiding us throughout all this time is that we wanted to take all of the advantages of blockchain and this possibility and the potential of blockchain and then we wanted to make sure we could provide it to real people in the real world at a large scale at global scale so actually matter right so it goes beyond just being the ordinary people people are not that crypto Savvy like us yeah and which I mean which at the time I mean back in 2016 right meant everyone because there were no crypto Savvy and and I mean even today the average crypto user is not crypto saavy you could say right and we were talking about that with tether and all that we'll get to that in a moment I'm sure um but you know so this focus on ensuring that there has to be actual usage there has to be real users taking advantage of whatever this technology can provide has really been guiding you know the decisions and the evolution of the project over all these years right so obviously the rwa sort of juncture right which a lot of people are still I guess you can say processing actually right um I mean that is the that is in many ways like the key thing that ties to this fundamental uh this fundamental question of like do you want to be ideologically or sort of theoretically and and and and optimized or do you want to be sort of more sort of utilitarian optimizing right like how to actually deliver what's possible to deliver to actual people in the real world right so because of something called the stable coin trma that we also just discussed right that basically means that you simply cannot scale up something that is pegged to the dollar whatever it's pecked to actually anything that's pecked to an asset any sort of synthetic asset P to some sort of real asset has to tie its collateral back to that real asset you can't you know turn uh you know you can't you can't create something out of nothing you can't turn iron into gold just by by wishing it so right you have to ultimately um um like have the I mean if you want to provide stability there has to be something stable sitting there if you really want stability yeah yeah and and then the question is what is stability right because it's different to many people right to to some people uh stability is freedom from the US government right uh and I would argue not all of them but many of those people actually uh I mean they're already in crypto at this point right and there truly aren't that many when they you know when when you understand what freedom from the US government really means because it pretty much means you get the whole Bitcoin and that's about it because more or less everything else ends up tying into the real world in one way or another but then you know with that uh connection to the real world you get all the real features that the vast majority of real people actually care about and in particular what you know I mean when it comes to the ordinary people what they care about what they think is stability it is stability is familiarity which is the US dollar right for for the vast majority of people um and so in the end that's why that's why you need rwa to back something like that and I mean any I think even the most sort of modern uh um you know decentralized protocol stable coins uh they they build rwa in right from the start because they immediately recognize that you simply can't like you just you just can't you know will um demand for leverage on decentralized collateral out of thin air right there's a there's a limit to how many people are willing to lever up on Stak e or something like that right um and and and I mean you still have advantages from this right because you with real assets what decentralization offers is um transparency and and guarantees around diversification and then crucially that the layer itself the sort of the coordinating layer itself is fully decentralized so so so let me just uh go into the details a little bit so t- Bells themselves uh it's harder I I mean the transparency uh eventually everybody is pretty much the same you get audited reports things like that um however the as a as a stable coin issuer the decision making the governance the operations the treasury operations all of that because maker is using heavily using smart contracts so all of that then is offering better transparency than a centralized issuer am I right yeah and if I was going to make an example about this right if you think of something like the financial crisis and the subprime mortgage crash and so on right like in a sense none of the assets you know none of the the underlying assets and all those houses and buildings like none of them got like seized or you know turn you know I mean turned out they they didn't they didn't have the value people thought they had but like the value that they had didn't I mean they were houses indeed right they weren't like fake or anything like right the entire failure of that was the governance and the sort of the coordination and the aggregation was completely messed up and broken right uh and so that's that's one of the thing that's I mean so so fixing that and and proably fixing that with blockchain and with decentralized governance that's a huge upside that crypto absolutely can bring to the table that is you can really apply to the real world in a way that that will will help people and will just give them better assets give them them more stability give them better returns and so on now the thing is Even This what I mean this sort of theory about real world assets and all that the the reality is even what we're talking about now that is still just like a bunch of like Theory and even ideology some of it which again like normal people don't care about this at all this is absolutely not going to make them use a stable coin but they they truly don't care about this kind of stuff right those who care again they're already in crypto many of them probably in this room right there just not that many that care about these things right like um and so as we were talking about earlier right the best example you have of you know of a situation where blockchain has been applied to the real world in a way that benefits real people and actually has had an impact that is of course tether right and how tether's been used by people especially here in Turkey to escape inflation in Argentina and yeah yeah I mean there's all these interesting examples of of just like how tether has become this like it's become a a source of stability that people basically feel like they can trust more and can more easily access and that has some kind of neutrality and some sort of predictability to it um and so that's great I mean that's that means there is a real like there's a real demand out there there's a real use case and there are real advantages that blockchain can bring to the table decentralized stable coins like D um Can can take that I mean can can basically take that existing Market that existing opportunity and just apply a lot more advantages and a lot more benefits to people such as what we were just discussing okay so based on that do you uh does this do you uh think this theory is going to work um blockchain is a trust building machine because of the transparency that it provides and immutability right so and the money and issuing new money um trust is always the thing that's hard to accelerate that's what that's I think one of the reasons why a lot of people I know emerg markets they need access dollar liquidity uh US dollar liquidity and they know usdt but still they don't understand crypto that much so they're like uh is this real like it takes time for most of the people to to build that trust and supposedly blockchain as a trust building machine can accelerate this so do you feel that by promoting its transparency aspects that treasury operations governance a lot of the operations of maker and die is fully transparent and you Market this and and and then you eventually can accelerate the trust uh op uh the trust uh building process so that you on board people faster than other Sable coins yeah so what you're describing I would say that's to a large extent what maker and die attempted for the last many years basically and I think the conclusion is it doesn't really work and the reason is again this is not actually like when you're deciding what stable going to use this is just some theory that you don't actually care about and the number one thing that's going to I mean I think the reason why tether is super popular everywhere uh and and sort of you know is one of the only stable Co it really retains this popularity right and it comes from the fact that that's what people are already using so like the number one thing the number one question that matters when you're deciding on a stable coin you're trying to get adoption of stable coin is existing Network effect right yes and that just means I mean and this is of course uh this is a huge challenge because that means the sort of the Natural Market Dynamic is whoever is already big remains big and anyone new don't really have a chance right so so that's actually what led us to endgame because because basically we realized we we can't just keep trying to do the same thing and attempt to compete in a dynamic where inherently we are at a disadvantage because all the advantages we bring to the table that they're very real but they are also theoretical and and people don't actually care and they don't can they can't sort of feel them and what they can feel is scale and simplicity hard to make that into an accelerator your advantage into accelerator so so we got to figure out what is it that a decentralized stable coin and and a dow and and decentralization and sort of the the the realities and the ideals of defi what can it bring to the table that can actually cause uh end users to feel the advantages of decentralization and not just have to think about it which they don't want to right um and so that's that's called of endgame right so endgame is it's a sort of a almost like a formula or like a set of principles that at its call focuses on retaining and even strengthening the fundamental resilience that's possible with Defi and and decentralized stable coins um but even more importantly sort of leveraging that to build sustainable growth that sort of self- perpetuates right because that's then the again what's the point of really fancy resilience and stability if no one's using it right it's pointless in that case Beyond Theory um and uh I mean okay so one one way we want to sort of position ourselves very simply and we're already to some extent doing this uh when you think about tether as like this is what many people are already using right basically uh so I don't think that new stable coins or even maker and D in its current position should attempt to compete with tether as money on moneyness again because that is just not going to work because they've I mean they've already achieved that money feeling and no one else has at to the same extent they have right but what you can compete on is basically the efficiency of what's possible with Defi and essentially focus on being savings right and so you know I like to talk a lot about this and and I was explaining this so everyone in Turkey they as I told you before right everyone is like everyone wants tether that's what they want how are you going to compete with that and what I say is look we're not trying to actually compete with tether because they're the checking account right you can send it you can spend it that's great what we want D to really be in this context is to be the savings account right so it's things like the dce savings rate um and then the the liquidity and the the capacity we have as a defi protocol to build things like the the PSM right the mechanism that allows you to instantly convert today from die to usdc uh as a part of of end game basically this will increasingly also then focus on being able to convert to usdt having that instant liquidity while also actually you know managing the risk um of something like large scale exposure to usdt which which we don't actually want um because for the reason that that I mean uh everyone else is sort of like I mean then at this point I totally believe in the stability of tether but it just it's not tied into regulatory systems in the same way that something like usdc is for instance right so the straddling that question of like how much how much exposure do you how much of that exposure do you put into die itself uh versus H how smooth and instant can you make that native sort of feeling of actually uh it's like a savings account to your te you can just use right that's that's the kind of of um of opportunity for growth that I think uh you know well again that's it's already possible today because of the dieing rate right Y and then with endgame um you know we're just going to take all of this to the absolute the next step with uh I mean first and foremost with subd right so subd is was basically that's how we're going to scale up um I mean ultimately the governance the the I mean the advantage that we have that allows us to deliver all these things in a way that's decentralized yet it's as solid as if it was a company but more transparent new govern the the the advantage here is competitive Advantage is uh new uh new governance model uh transparency um and the Dow and the subd end game framework yeah but I mean but again actually all of those things are still just building blocks they're not real advantages that users care about right so actually so the number one thing we're going to do in the in the short term is we actually rebranding you know maker entirely right so we MK and die sticks around stays exactly the same people who use that and don't want to be messing with Complicated new features that they don't care about they they just can just totally ignore it but the project as a whole sort of rebrands and introduces new uh like a new stable coin and a new governance token and the goal here is to really align end to endend the whole project around this idea that the focus is growth that users I mean growth and and and features and advantages that users care about and they understand and simplicity in the message of this is what it is right this one important feature is the savings account concept yeah so so so the savings account that's I mean we already have that so we will simply just have branding that is more aligned with it but then the subd I mean the thing is tether and what you know anyone it's not really that much of a unique feature to offer a cash yield ultimately I mean right now D and S die and a die savings rate had huge success because it did sort of trailblaze having that available and what felt scalable and safe on chain but absolutely I mean it's everyone else is catching up so that's and and you there's no reason why something like tether wouldn't be able to offer something a bit like this in the future right so what we really want what we really view as like the truly unique thing you can offer with a dow with decentralized stable coin is um I mean I would say basically the one other major use case major reason why crypto is cool that we've seen other than stable coins which is of course the number one business model that exists in crypto today right and then and this second like secret source that crypto is capable of uh is essentially the magic of defi summer what we saw right how actually crypto is capable of organizing humans and drawing out value of humans in a way that sort of goes beyond just simple um I mean basically what what's what you can do with I don't know companies and legal structures and so on right there's some sort of unique value you can you can create you can get out of people through the sheer accessibility and the permissionless of simply giving out tokens or giving them access to tokens and then letting them collaborate letting them coordinate and and F try to achieve some goal a new way to organize humans and societies so as to accelerate economics activity much more e uh efficiently than the old way I I want to leave um time for this organizational aspect and talk about maker DS in gim um as the biggest D so here comes the next question we have some time uh Nobel Prize receiver econ uh Economist Douglas North believed that reducing uncertainty increases economic activity for example I'm willing to make a loan if I'm certain I'll get repaid we've therefore invented contracts but to enforce contracts and ensure their immutability we've also invented centralized institutions whose mission was to help enforce these contracts these centralized institutions often end up working for their self-interests breaking the very imitability that were their missions to uphold maker Dow has the most experience leveraging a dow framework to build large scale organizational alignment and imitability you call this alignment engineering Dows also offer better transparency and stronger resistance against government censorship of defi money however today's maker da must leverage existing legal Frameworks and centralized institutions it needs many business agreements to protect its rwas for example treasury bills are themselves issued and held by centralized institutions so what's the end game here for maker Dow as a dow how does maker plan to bridge the best of both Defi and centralized Frameworks so that it can continue to bring bring trillions of offchain GDP onchain while leveraging Dows subd and smart contracts to still uphold immutability and transparency which ultimately leads to better organizational alignment and accelerated economic growth yeah so I think actually I mean what we were just talking about right of um Dows and tokens and yield farming and what I mean there's been there was something in defi summer in crypto that showed that there is some real value here there's a real possibility here that we can do something now I want to add though that unfortunately defi Summer and the Bull Run we saw last I mean unfortunately while people discovered something real and were onto something real Mostly it was totally was wasted right because everybody decided to basically sell out and turn it into Pon schemes all of it right but but that's because it was real right when it's real then it it definitely will overhype and and collapse and then come back again yeah sure and I keep saying this also right why are there so many scams in crypto it's because the technology is so powerful that uh it directly touches on the power of money and it just it draws in the wrong types of people and and there's just so much potential to do both both good and bad and then often people choose to do bad but some will do good right and and there I mean basically there are major D5 projects and so on right that really are doing something real with this and right and pushing the bar the boundaries and this anyway so so so it's like I mean we've seen some good come out of Y farming but we absolutely haven't seen it take into its it's sort of it's its extreme in terms of how much can you really use this to to deliver better economic outcomes and and and improve the world and all that good stuff right but also what's interesting right is that this purpose and this mechanism of coordinating and organizing humans and labor and capital that is also just the function of money itself right that fun is what money itself also does right so we think it's sort of natural that you combine that within this sort of new possibility of dows and specifically yield farming right of these subd Dows that we creating as a part of of basically reorganizing Maker's governance structure and that brings us to this like what is the final um you know what is the final unique value prop of the new stable coin right the new brand that sets sets it apart and will carve out a unique user base hopefully fingers crossed right that that that you know makes it totally unique and makes it possible to complement tether or whatever anything else because it has this unique aspect to it right and that is the fact that it has this native very very safe yield but in very interesting uh sub out tokens right that are you know entire self-contained economic systems and Dows that has a lot of possibilities right they can be almost unbounded on creativity but at the same time they're rooted in like Maker's stable track record and and the ability to generate real profits and and to to actually have you know have real economic activity right will subd um have corporations or legal entities so that they can deal with they can leverage existing legal structures leverage the court system uh law enforcement uh legal presidence and also to hold rwa so a dow self cannot have a legal entity but it but Dow can interact with legal entities and basically through legal entities in in but but I mean what's strange about them is that adal kind of had it has to have a different me approach depending on the jurisdiction right so and so it's often I mean the way real assets are done in maker today is you have these specific arranged structures they're called which are sort of like these conduits between Defi and and the real world um and uh but basically the whole what's so cool about I mean and so there's so much opportunity because there's so many countries so many jurisdictions with evolving regulatory Frameworks right and evolving threat models right and threat levels and and and risk so subd Dows enable the ecosystem to very flexibly and very dynamically allocate to wherever the opportunity is best right and each subd out gets to sort of compete on equal terms to to find the best opportunities right and then I mean and the point is then this value this upside is delivered to the actual end user of the new stable coin in maker right that they get to pick what do they believe in what do they want to jump into in crypto right what do they want to do in def5 and I just you know and just to then give an example of like what are the different options what are the different upsides and possibilities I right right the whole the key is that Subs are specialized in different areas right so some of them are more trafy boring even financially focused right so there's two rwa subd Dows uh initially planned for like upcoming launch in what we call phase two so that's like the phase following the Rebrand um and then we have uh spark Dow which is probably the most like famous most well-known upcoming subow which uh is like deep defi uh sort of crypto Innovation decentralized collateral Focus subd um that right now uh is is is really I mean this Flagship product is called spark protocol which is an a fork that uh just basically delivers the the capital the scale of maker but through sort of the Innovative uh sort of current gen lending U engine of of a and other basically other types of cutting Innovations like that and then there there is Sakura da which is this most experimental subow uh community that we're attempting to build which is where really what we're trying to focus on is what if subd are less about just making money and just finance and numbers and all this stuff for nerds and and economists how to make it more relevant for normal people and and and turn Finance less I mean personal finance should feel less like a job and it should feel more like a game right uh and I often I sometimes refer to this like the ticktock ification of Finance right that this is what the people of the future want right they don't want their Bank to be gray and boring and and feel like work they want to feel like tiktock right and and then they're going to get into personal finance right can we propose like Turkish lra DS or Argentinian pesel DS Indian rupes DS subd sorry so that all actually happens emergently uh because subd Dows are not created top down they are are I mean so initially there are four specific created as sort of the example case of subd but all future subd are created algorithmically as a blank slate and then the only way the tokens are distributed are through yield farming and then whoever yield Farms the tokens they decide what happens so you get this complete free market for ideas and creativity uh and hopefully a huge amount of untapped latent Innovation and potential can then be Unleashed through the subow as this vehicle so so we have many money designers uh stable coin protocal designers here many many um can you use one minute to explain to them if they want to work with maker or if they want to propose a subd under maker what's the best way yeah so again so you can't actually propose a subd you can only try to influence a subd once it's been put out there as a blank slate by farming the token but the thing I mean so in the past right everybody always wants to work with maker and we don't have the capacity to interact with so many counterparties the subow is a big solution to that right you can um you can find the subow that's relevant for what you're doing and then engage directly with that community and now instead of being thrown into the big makeer Forum with like 200 people who don't even are not even interested in what you're talking about right and they're drowning you out you can go to a more focused specialized community that knows the subject matter right like real assets then these people that only do real assets but there is no emerging market ofd right now how do we how do we work with maker to create one you mean for yeah you're talking about for like emerging you know adoption here in Turkey yeah so so I mean so the subd still the initial kind of uh proof of concept subd are still being shaped and there will absolutely be uh one specific that will have that kind of focus because it's it's such a big huge marketting opportunity for sure okay I think we're out of time um thank you everybody for having us thank you room thank you thanks a lot run and Wayne thank you for this fruitful session