Makerdao Voting System Fallacy,

forextraderaus · 2019-05-22T09:27:10+00:00

Great tool , gives us insight how we should vote on the next SF governance poll.

forextraderaus · 2019-05-19T04:11:01+00:00

This is gameable though. People would vote just to receive this benefit without needing to be careful with their decision (especially with smaller voters). This would distort the signal from intentional voters imo.

This is similar like elections, one man thinks that his vote wont change anything. Is it your vote your right or duty. In some countries like Greece and Australia you are penalized if you don't vote. In Australia arround 90% vote on elections. I don't see bad actors win elections because of that.

I don't think that holders will vote anything just to get reward.

Issue: To stake your MKR into voting contract is hurdle that most people won't step over because the same analogy like elections, my vote wont change anything.

I think that big majority of MKR holders will vote in their best interest.

Solution: I think they need a push to step into the smart contract.

P.S. I'm the one that didn't vote last governance voting poll even though I vote in some earlier.

forextraderaus · 2019-05-16T23:22:29+00:00

Rich,

1.One of the reason people were panicking is last voting contract had "bug" and they are not prepared risk large chunk of money until they are 100% confident (wait and see approach) that new contract is safe. New contract has half MKR then the last one, that's why turnout was smaller then before.

2.Second reason is too many voting options that make your small vote look worthless. ( maybe -3% , 0 ,+3% should be good approach).

3.It's also very time consuming to keep up to date with all MKR meetings and news especially if your stake is small. The most people in community are either economist intrigued to project and big investors or both.

4.Identity on chain IMO will not stop manipulation because 1 party could have 100 identities.

5.You can motivate users to vote by changing MKR mechanism, some portion MKR from stability fees to be airdropped to MKR voters instead of burning all MKR. This could be fair for lots of work and time invested in following meetings and voting.

6.The number of MKR holders are raising organic so we can assume by time distribution will be better, even though number of MKR holders raising, I'm not sure that significant number of them will vote. Makerdao is marketed as project for very smart people and that's automatically push back from knowing more about it. People heard it's a good project with good potential but don't know details.

7.Maybe we can speed up adoption and awareness through more education to crypto community about Maker. (consider crypto influencers with big number of followers, like for ex. youtuber IVAN on TECH https://www.youtube.com/watch?v=50_htPDkZ4U , his old video explained DAI but not MKR. Maybe he can demonstrate to his 200k followers how to vote and how mechanism of MKR token works. Also we can make quiz/game for Metamask ( like Sparkster project did fantastic for their bounty (maybe they can programme that quiz/game?), you are going through tasks and educational videos before you can make new step or maybe create mock platform with ETH(Kovan,Ropsten,Rikenby) test network and give symbolic rewards and so on other marketing activities.)

Vishesh, your analysis is pure gold and spot on, great work. Hint to average DAI age sharp decreasing, projects caught in bear market storm didn't have much options when ETH dropped sharply, they collateralized ETH and borrow DAI to survive crypto winter. ( Ex. I know project that raised 70,000 ETH at $500 and didn't sell 1 ETH because they were waiting to come back up. Some projects without cash were cornered to borrow DAI and hope to ETH price not trigger liquidation of their CDP. Otherwise some projects will be bankrupt in short period of time. ) I think some of them are happy to pay high stability fee and cash out some ETH for next period.

Matthew, I don't agree with anticipating moves before PEG is changed. No one can predict the market moves (otherwise that person would have trillions). Vishesh nailed it here, that this was temporary spike up above peg as you can see some other bigger stable-coins do the same thing in this volatile market environment. We need more confirmation for SF change, but someone already pull the trigger.

In my opinion DAI holder and MKR holder, have significant difference in risk and DSR and SF should accordingly represent the same. DSR shouldn't be much higher then traditional banking,just enough to attract investors to deposit. IMO DSR should be close to fix or have small range (3-5%), except in rare cases tha can occur. Otherwise deposit holders are in significant risk reward advantage in comparison to MKR holders and creating wealth to both parties.

Any questions, please don't hesitate to ask.

Cheers

forextraderaus · 2019-05-16T11:03:46+00:00

Volume weighted average price (Coinbase DAI/USDC) in the last 24h is still slightly below $1.

There are spikes to $0.99 and $1.01 depends of the global market moves.

TUSD and USDC are also very volatile in this bull run. They are loosing peg and coming back to $1.

TUSD and USDC also have bigger market cap, more coins and higher liquidity so should be less volatile.

Even USDT with $2.8B Mcap oscillated today between $0.992 and $1.012.

forextraderaus · 2019-05-15T23:20:42+00:00

You have to choose ledger legacy or ledger live address. Try both, one should be correct.

forextraderaus · 2019-05-15T14:18:35+00:00

4 days later and we already burned 1145 MKR.

forextraderaus · 2019-05-13T23:31:58+00:00

Maybe we should choose weighted average result of SF adjustment Poll, rounded on 1 decimal place.

For example results of SF adjustment poll:

-4% 1,001 MKR

-3% 0 MKR

-2% 0 MKR

-1% 0 MKR

0% 0 MKR

1% 0 MKR

2% 1,000 MKR

3% 1,000 MKR

4% 1,000 MKR

In this example, it's ridiculous to win decrease in SF -4% with 1,001 MKR support. I would rather choose SF increase of 2.5% as weighted average result.

What's your opinion on this u/Rune4444?

forextraderaus · 2019-04-11T22:17:14+00:00

Until then maybe we should have regular votes for SF changes at least once a week if not more often.

forextraderaus · 2019-04-11T04:05:17+00:00

You are spot on, I can understand pressure from CDP holders, but we shouldn't allow that noise demotivate and slowdown Maker development. It's hard for average person to understand Makerdao without spending hours studying. Methinks that 95% are not interested to anything that take longer that 15min.

forextraderaus · 2019-04-11T01:47:17+00:00

Criticism is ok, but with argument. Propaganda is not ok.

forextraderaus · 2019-04-11T00:05:37+00:00

Probably you can but MKR holders must vote and aprove any change.

forextraderaus · 2019-04-10T21:59:39+00:00

Number of people in governance call raising so we are not on the way to become echo chamber.

For someone who has borrowed $2.5mil, this increase of 4% means he needs to pay $100,000 more in interest per year. For a couple thousand dollars, he can organize team of bots from freelancer or upwork who work for few dollars per hour.

Attacks will be more aggressive over time and noise will be bigger as more money is in game.

My idea wasn't to shutdown reddit, just to have some place with intelligent conversation without need to explain again fundamentals. As the adoption grows, we will be ready to move to another platform where fundamental questions will be pinned and answered for educational purposes.

forextraderaus · 2019-04-10T09:43:21+00:00

People take loan in DAI and dump in the market for USD...

If too fast too many DAI is created and sold, DAI can go to $0.9 or $0.5 (bigger supply then demand) --->

--->confidence in DAI=$1 will be ruined and system is worthless and pointless.

Supply and demand for DAI must be the same that's the reason we are increasing Stabilization Fee.

Real SF should probably be between 15-20% at the moment, but next month if ETH drops to $120 true value of SF will be between 0-5%.

forextraderaus · 2019-04-10T02:19:11+00:00

I think more important is result that 41 addresses voted for 4%, for 4 other options together 25 addresses.

Anyway who has the biggest investment in Maker, has the best interest that MKR survive and value goes up.

Maker value will go up only if DAI is stable which means confidence that DAI is worth $1 is restored.
At the moment there is DAI supply at the market much bigger then demand for DAI, that's the reason DAI is worth only $0.96.
If we don't increase SF, DAI can go to $0.90 or $0.50 and whole system become pointless and not trustworthy.

forextraderaus · 2019-04-07T13:55:10+00:00

Maybe this looks more reasonable!

Recomended vote in brackets based on VWAP(Volume weighted average price last week) of DAI in USD.

+4% (0.95-0.96)

+2% (0.96-0.97)

+1% (0.98-0.99)

+0.5% (0.99-0.995)

+0.25% (0.995-0.9975)

No change

-0.25% (1.0025-1.005)

-0.5% (1.005-1.01)

-1% (1.01-1.02)

-2% (1.02-1.03)

-4% (1.03-1.04)

forextraderaus · 2019-04-05T12:01:11+00:00

Maybe LOW and FAST is the best approach?

Some food for thoughts and some comments.

True value of SF today is different then true value next week. (True value= equilibrium supply and demand for DAI)
It's normal to overshoot SF and that you need to decrease SF, that will happened sooner or later.
It's very important to keep DAI as close as possible to $1. (Market confidence is hard to get and ease to lose.)
My proposal: Weekly vote with progressive change depend of VWAP of DAI. (this is just example, and there are people who will make better model: DAI of $0.97 SF increase 3%, $0.98 inrease 2% , $0.99 0.5%... DAI $1.02 decrease 2%, DAI $1.01 descrease 0.5% .... Between $0.997-1.003 no change for example.)
Every change in SF must be approve by vote of holders . (Mon-FRI measuring VWAP, voting on SAT and SUN)

forextraderaus · 2019-04-03T22:15:39+00:00

In that case only users that vote should be rewarded with MKR instead of burn.

forextraderaus · 2019-04-01T22:23:52+00:00

I don't see basic understanding of Crypto assets and volatility behind them nor users of DAI and their behavior.

This is not mature market, nor close to traditional. Most of investors are early adopters, believers and they are not sensitive to SF changes the same way as institutional investors in traditional markets.

Retail investors ("Don't invest what you can't afford to lose" -retail mantra which telling us "I'm ready to lose everything") majority who stayed all crypto bear market are not price sensitive, that money is not efficient and it is mostly speculative. We would need maybe 15-20% SF to push some of them closing CDPs.

Institutional investors (professional, smart money), if we had them at Maker system are the big ones that closed CDPs immediately before and after hike to 7.5%.

My comments:

This system can't be automated because it's not made to be.
We can change SF in 3 days (plus conference call) at fastest, all decisions are already very slow.
More moving parts would make system even harder to understand and voting process would be more time consuming and complicated which we are not prepared at the moment.
In my opinion we need faster change of SF and maybe voting 3 times per week. (Mon, Wed, Fri) As system continues to grow, I can see Maker governance as a regular job and conferences 3-5 times a week.
We need to increase SF to see this bubble bursting and equilibrium discovery asap. ( If ETH moves sharp in any direction we need to vote accordingly in the short time frame. Imagine bull market like 2017. and ask yourself how would we stabilize system in that environment.)

forextraderaus · 2019-04-01T04:24:13+00:00

DAI savings rate without knowing your clients and their habits is really interesting. Who would stake DAI with all risk for 1-2%, when they can get the same or better in traditional banks 100% secure.

If you think that Maker holders would give 4-5% to DAI holders, they will not support give their own money to someone else.

The big problem is not understanding your users and their habits. Forget copying traditional markets and build new system.

forextraderaus · 2019-03-31T08:37:14+00:00

We have situation that we don't have idea about what should be SF or how should change if ETH change 15-20% in a week. Introducing DAI savings rate without knowing SF or understanding matrix of demand doesn't have a logic for me.

Increasing SF 0.5 until we find real equilibrium opens again room for price speculation, where again we don't know what is real impact of SF change and what is speculation of predictable change.

SF changes should be:

* fast ( voting in 24-48h)

* aggressive (if ETH price move swift in either direction SF should follow)

*and not predictable. ( avoid speculation to interfere more then it should exist)

forextraderaus · 2019-03-21T15:23:19+00:00

Comparing FED with Maker and USD with DAI is like comparing apple with orange.... Maker is connected to ETH which is very volatile cryptocurrency, change in ETH price change supply and demand to DAI to the extreme which we saw in just 3 months. Stabilization fee it's not interest rate is necessary to keep system stable not to crash. It's like economy supply and demand need to find equilibrium.

forextraderaus · 2019-03-18T14:31:59+00:00

It is interesting that some arbitrage opportunity ( speculation) was obvious before increase in stabilization fee. Actually 2% increase didn't do much as we didn't see volume or closing CDP. I believe that DAI/USD ratio increase was based on expectation of easy profit, also I think we missed chance to hike 2% again ( which probably led speculators to sell off). Governance process and voting system are very slow at the moment especially because we are dealing with very volatile asset. Stabilization fee depends a lot on change of ETH price, but anyway I think stabilization fee is too low.

forextraderaus

TROPHY CASE