The Love-Hate Relationship between MakerDAO and the Founder of Ethereum

On September 2, the founder of Ethereum sold 500 MKR tokens worth approximately $580,000. This move has drawn widespread attention, seemingly related to the announcement by the founder of MakerDAO to build a new chain based on the Solana codebase. This is the final step in the founder's "Endgame" plan.

MakerDAO has been a protocol frequently mentioned by the founder of Ethereum since its establishment. He has publicly praised MakerDAO as an impressive application on multiple occasions. Of course, aside from the accolades, he has also questioned the development direction of MakerDAO several times. This article will briefly outline the development history of MakerDAO and incorporate the founder of Ethereum's attitude at each stage, providing a multifaceted understanding of the interesting story behind this protocol.

Ambitious Birth

The founder of MakerDAO explored the possibility of launching the stablecoin Dai on BitShares before launching MakerDAO on the Ethereum network. After research, he concluded that the conditions on BitShares could not support complex financial protocols, so he decided to build an on-chain USD stablecoin based on Ethereum. In early 2015, he began sharing and discussing the initial code of the Maker protocol with members of the Ethereum community on Reddit. In December 2017, MakerDAO released its white paper, stating that initially, the collateral for Dai could only be ETH.

MakerDAO has developed rapidly, attempting to use other ERC-20 tokens and tokenized gold for collateral in Q2. However, the true multi-collateral (MCD) system was not launched until 2019, reflecting that perfecting the ideal dollar stablecoin protocol is not easy.

In September 2018, the founder of MakerDAO stated that they were collaborating with multiple real estate tokenization projects, hoping to use real estate assets as collateral. This shows that MakerDAO's proactive efforts in the current RWA narrative are traceable.

At that time, the founder of Ethereum had a high regard for MakerDAO. In an interview at the end of 2018, he stated, "MakerDAO left a deep impression on me." He emphasized that theoretically, the MakerDAO model could be extended beyond the dollar to encompass any asset, consumer price index, or real estate index.

Encountering setbacks but continuously evolving

In September 2018, A16Z invested $15 million in MakerDAO by purchasing MKR. By early 2020, the total supply of DAI reached 100 million. However, in March of the same year, a market crash led to $5.3 million in bad debts, and MakerDAO overcame the crisis by auctioning MKR. The price of MKR fell from over $600 to just over $260.

However, MakerDAO recovered quickly, with bad debts down to about $100 on March 23. Subsequently, MakerDAO transferred control of the MKR tokens to the governance community, urging the community to "maintain deep engagement." To address the decoupling, MakerDAO supported USDC as collateral through voting and offered high interest rates.

At this time, the founder of Ethereum is no longer very supportive of the development path of MakerDAO. He believes that a stablecoin protocol with a single collateral and minimized governance is needed. However, the community believes that a single collateral is insufficient to support the expanded issuance of Dai, and the introduction of USDC allows Dai to quickly return to stability.

Facing challenges, turning crises into opportunities

In mid-2021, the price of MKR rose to over $5000. However, the subsequent 519 black swan event impacted the crypto world and affected MakerDAO. Nevertheless, the biggest challenge facing Dai is the algorithmic stablecoin UST.

UST maintains stability through its minting/burning mechanism with LUNA, with a maximum market cap approaching $20 billion. To expand the use of UST in Ethereum, the Terra community proposed the introduction of a 4pool composed of UST, Frax, USDT, and USDC, excluding Dai.

However, on May 8, 2022, UST began to de-peg. The UST/3CRV pool on Curve experienced severe imbalance, with UST accounting for over 67%. Ultimately, UST collapsed, and Dai emerged victorious, solidifying its position as the leading decentralized stablecoin.

After the collapse of UST, the founder of Ethereum wrote an article mentioning a greater focus on Rai rather than Dai, because Rai "better represents a purely decentralized, ideal-type stablecoin, and is only supported by ETH."

The performance of the RWA narrative is stunning

As the Federal Reserve raises interest rates, U.S. Treasury bonds are strongly attracting funds, leading to a significant decline in on-chain liquidity and protocol revenue. MakerDAO has begun to lay out RWA, redeeming stablecoins such as USDC for dollars to purchase U.S. Treasury bonds. Currently, RWA dominates the assets in MakerDAO, allowing users to enjoy the returns from U.S. Treasury bonds while becoming the main source of revenue for the protocol.

This strategy helps to mitigate the risks of centralized stablecoins, increase protocol stability, and enhance the DSR.

On September 1st, the founder of MakerDAO proposed building a new chain based on Solana, which sparked a huge response. He later explained that this matter should not be viewed through a "tribalism" lens. The founder of Ethereum did not comment on this, but sold 500 MKR on the same day.

The founder of MakerDAO is an ambitious pragmatist who continuously promotes protocol innovation. In contrast, the founder of Ethereum advocates for a kind of "pure decentralization" and idealism. The collision of these two ideologies forms an interesting aspect of MakerDAO's development process.