
An exploration of MakerDAO’s governance incentives - benmdi
https://www.scopelift.co/blog/fakerdao
======
TheColorYellow
This is a simple, and thus great, way of using Makers incentive structure
against itself.

While specific to the MakerDAO ecosystem, it effectively highlights the
complexity and challenge in adequately creating a _decentralized_ governance
structure.

Essentially, to remove centralized control, you must structure incentives such
that the system ultimately acts as intended, but there is always going to be
ways to subvert the incentive structure. The goal is that costs of conducting
such activity are too much to be reasonably conducted.

It seems that these systems will take years and years in the wild before their
incentive structures are iterated upon enough to finally get to a point where
truly large business value will flow through it. Exercises like this are
useful in either disproving this whole concept or incrementally improving it.

~~~
latchkey
You basically described PoW (proof-of-work) mining, which was (imho) the
actual innovation with Bitcoin. The current idea though is to build a
byzantine fault tolerant system that doesn't require massive amounts of
"wasted" power. I put wasted in quotes because it is actually doing something,
it is just the output isn't useful for much more than validating the
transactions.

Interestingly, Maker is currently built on top of (Ethereum) PoW. Some day,
ETH2, which is PoS (proof-of-stake), will solve all the same issues you're
talking about. Or at least that is the dream. We will then have a pretty
amazing digital rube goldberg machine where we can sit back and watch the
gears turn.

~~~
snisarenko
PoS will not solve anything. PoS is just obfuscated proof of work. The same
amount of "resources" will be wasted in a PoS system, its just going to be a
different type of resource.

Required reading

[http://www.truthcoin.info/blog/pow-
cheapest/](http://www.truthcoin.info/blog/pow-cheapest/)

HN Discussion

[https://news.ycombinator.com/item?id=16451187](https://news.ycombinator.com/item?id=16451187)

Also newer article [http://www.truthcoin.info/blog/pos-still-
pointless/](http://www.truthcoin.info/blog/pos-still-pointless/)

~~~
decentralised
That's not even close to being correct, and blogs from maximalists are never a
good source of correct information.

Happy to walk you through what PoS looks like in 2020, but you can look up the
information yourself too.

~~~
ppf
Tell me, what does PoS look like in 2020, apart from delayed?

ps. Using the word "maximalist" immediately shrinks your audience to other
die-hard crypto fans.

~~~
decentralised
I'm not in it for the audience.. in any case, maximalism is mostly a self-
assigned title and the author of that blog describes himself as such

edit: how can something that is being discovered be late? The work on PoS is
almost completely greenfield and far from trivial. Many people made many far
too optimistic comments about how long it would take to get it right but no
one can say it's late...

~~~
ppf
Right, so when you say you'll tell us the state of PoS in 2020, the answer is
"currently unsolved".

~~~
decentralised
There are testnest live for some time now but there is still plenty to do
before anyone should trust their funds into the staking contracts.

edit: I mean, several dPoS networks went live without spending enough time
considering the game theory attacks, but now we've seen them used on EOS and
more recently on Steem so thats why I (personally) believe a real PoS is still
a few months away at best.

------
lazzlazzlazz
The analogy with the Prisoners' Dilemma is interesting here, but doesn't feel
quite right. In the comments, BenWang summarizes it like: "the effects of the
attacker will happen to all token holders regardless of what you decide to do
with your tokens, therefore, you might as well rent them out."

It seems that the MKR holder in this case could rent them out... or sell MKR
and exit their position entirely. And this seriously discounts the fact that
eroding Maker security is immediately obvious and can get priced into the MKR
token very quickly, defeating the point of a few percentage points of yield.

It makes sense on some conceptual level, but it's not clear that the
magnitudes of the incentives result in this toxic game theoretic equilibrium.

