White Star Capital Digital Asset Fund - newsletter #114
MakerDAO Proposes $14m to Sustainability Fund
MakerDAO proposes $14m to Sustainability Fund
White Star Capital Digital Asset Fund - newsletter #114
MakerDAO founder, Rune Christensen, has proposed to dedicate 20,000 MKR tokens (equating to about $14m) to a Scientific Sustainability Fund, in attempt to codify environmental activism as a ‘central purpose and value of MakerDAO’.
This is a feature in the in the latest draft of the Pregame Maker Constitution, a work-in-progress document shaping the future of MakerDAO’s updates and modifications. In it, Christensen notes that ‘MakerDAO will share financial success with the world through charity that is distributed broadly and with thoughtful and genuine consideration of its impact’. Stressing the catastrophic disasters that could result from climate change, Christensen asks DAO members to fund educational and awareness campaigns on energy solutions.
Maker’s Constitution
MakerDAO is behind DAI, the leading decentralised stablecoin, and MKR, the associated governance token. On Feb 1st, Christensen published a draft of the Maker Constitution to the project’s governance forum, intended to align ‘the political and operational interactions and processes that occur in Maker Governance’.
Christensen has titled the document Maker’s ‘Pregame Constitution’, given plans to expand into Maker’s ‘Endgame’ roadmap. This will involve establishing specialised subDAOs tasked with overseeing complex aspects of Maker’s operations, such as its increasing partnerships with legacy institutions dealing with real-world assets.
The constitution includes commitments to the core objective of Makor protocol- ie. to maintain the stability of the DAI stablecoin, and to prevent DAI tokens held in user accounts or decentralised smart contracts from seizure.
The former will partly be reaffirmed through their intention to generate new MKR tokens and auction them off to collateralise DAI should the stablecoin become under collateralised in the future. However, Christensen emphasised that this is not a ‘guaranteed commitment’ and is contingent on Maker governance approving any future proposals relating to the dilution of MKR’s supply. ‘This option needs to be available in case of unusual, serious losses where an attempt to cover the shortfall through the generation of MKR tokens would result in the MKR token becoming worthless and consequently forcing the Maker Protocol to shut down’, MakerDAO’s founder wrote.
The Environmental Proposal
Amongst other charitable causes, Christensen highlighted Scientific Sustainability as ‘a core principle of the Maker Constitution that recognises the unique, critical relationship between financial infrastructure and the global environmental risks of climate change’. As such, Christensen’s pregame constitution seeks to allocate 20,000 MKR tokens from the project’s treasury to a Scientific Sustainability Fund. This is being described as directing resources towards ‘awareness campaigns for promoting, educating and combating misinformation about energy solutions that have proven, real-life track records of achieving scalable decarbonisation.
The intention is to wound down the Sustainability Fund eventually and replace it with a Purpose System, designed to allocate tokens to charities that will have meaningful and verifiable impact.
What’s Next?
Some have criticised that Christensen should not propose that the DAO donate directly, and could instead invest his own money without putting downward pressure on the price of the token by selling so many. Christensen, however, has a long history of climate activism, having previously published documents on the governance forum on ‘The Case for Clean Money’. He wrote that ‘by tapping into the fundamental features of blockchain we can develop verifiable processes to ensure all Maker collateral is in sustainable and climate-aligned assets that consider the long term impacts of financial activity on the environment’. Moreover, sustainability was in fact voted as a guiding principle in the first-ever public MKR vote in September 2018.
In order for the proposal to move past the current request for comments (RFC) phase, which has a minimum duration of four months, the proposal then needs to be submitted to the governance cycle where people can evaluate and vote on the proposal.
In the meantime, this is a positive sign that the DeFi community is able to dedicate in a decentralised manner their financial success to causes they declare to stand behind.
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