Welcome to another episode of “Beyond Code is Law: Decentralized Governance, Dissected.” Host Josh Hale engages in a conversation with Dr. Nike Schmidt, founder of Web3andlaw and a Web3 copyright attorney with over a decade of industry experience. Driven by a keen interest in DAO governance, she brings deep expertise in music licensing and collective rights management to the table. Dr. Schmidt holds a Doctor Juris degree from the University of Freiburg and became a fully qualified lawyer in 2009 after graduating from the University of Tübingen, Germany.
Dr. Schmidt provides practical insights into MakerDAO, highlighting its role in issuing stablecoins like DAI and revolutionizing decentralized finance (DeFi) by eliminating intermediaries. The conversation delves into MakerDAO’s success, its current market position, and strategic initiatives such as integrating real-world assets through the Spark Protocol. Dr. Schmidt also outlines MakerDAO’s vision for achieving full decentralization and its plans, including introducing a third brand to enhance accessibility for retail investors.
Join the conversation as they navigate the intricacies of decentralized governance, shedding light on challenges and opportunities in the crypto space. Tune in for a practical examination of MakerDAO’s journey and its crucial role in shaping a user-friendly future for DeFi, enriched by Dr. Schmidt’s extensive background in music licensing and collective rights management.
You can listen to a full podcast at https://pod.co/beyond-code-is-law
To learn more about Q Please visit: https://q.org/
Hi this is Josh hail and this is beyond cod’s law hi this is Josh hail and this is beyond cod’s law decentralized governance dissected we’re joined today with nikah Schmidt and Alice Jen we are going to be discussing maker Dow and the the growth of this protocol that has become synonymous with the
Understanding that we currently have in the blockchain market of stable tokens good morning NAA how are you hi good morning and good afternoon everyone I know we’re all on different time zones we’re all over the world um you know this is obviously the uh the modern version of people flying to uh other
Places to do you know a interview or something along those lines everybody does it via Zoom now and we can be anywhere and you know I I find it interesting without getting too off task uh how often it is that you you end up talking to somebody and then you find
Out that for them it’s like 3 in the morning and you’re going oh I’m sorry you know um so maker you you you got some experience with maker you know the history of it you know can if for somebody who’s never heard of makerd what is makeer Dow ni
Um maker da is one of the first Dows um at all in the the industry in that is the crypto industry um I think launched first in 2014 shortly after the ethereum white paper came out and um as a kind of purpose that they gave themselves is the
Issuance of the first stable coin which is an integral part of the defy system and which makes the entire system work at all so I think that’s maker and a nutshell and um yeah I think that’s it in the CH now market share for makers they currently
Have what like 15 to 20% of the market of stables generally speaking without getting into all the other you know odd Stables that are you know on uh specific chains or something but like you have UCSD or UCSD um you have circles um then you have tethers then you have die right those
Are the primary three drivers of the Stable Market unless I’m completely missing one I I don’t think I am though yeah that sounds about right to me um yeah obviously one of the one of the famous and popular ones out there why in your opinion if we were
Just getting into the idea of a stable is are stable tokens so valuable to the overall ecosystem of blockchain what what do they do for the blockchain yeah great question I mean what what they do is they they facilitate basically what we know as decentralized Finance um so decentralized Finance is the financial
System without the intermediary without the broker without um any platform in between and um what they allow to do is take away the broker take away the order books and um make it easier to um take out loans by um taking taking a d and um taking
Any collateral exchanging it for die and taking out loans on assets that you already have and um make it easy to swap tokens and um yeah without any intermediary I think that’s the that’s the essential functionality of a stable coin is to be able to to swap coins also
To park money and to to gain yield to um yeah provide liquidity etc etc so there are multiple functionalities of a stable coin and I think that’s yeah what what makes them so so crucial for the ecosystem couldn’t you do most of those things like with eth though I mean it’s
It’s not that eth doesn’t have the capability of earning a yield you know via staking or whatever you know there there’s some finite use cases for both obviously on a stable and a non-stable but I I I I would say that if if you were pulling back a
Little bit for somebody who’s not familiar with Stables or uh you know standard gas tokens I I would I would argue that one of the primary drivers of the Stable Market is the the one of the last things you said this idea of parking funds in a manner that is you
Know maybe a little less volatile I mean um what do you mean well I mean the stable I mean the the stable coin itself is I mean is designed to be stable exactly much Les much less volatile than East so no that’s my point is is that a
Stable is designed to be less volatile yeah um whereas eth is not designed for volatility at all it’s not that’s not part of its function right um you know there’s there’s been several moments over the course of you know years at this point where Stables have dep pegged
But by and large they’re they’re much more um they sit at a a particular value point where you kind of have an idea of what it buys you know how how many Big Macs it buys or how many you know um snicker bars or coca-colas right um so
That that’s that stability is kind of what was the primary driver of maker out right or am I am I missing something entirely no sure yeah that’s the whole point um behind the stable coin is to have some uh some asset that you can exchange that
Has a stable value and um that you don’t have to go back to the traditional system to take out loans and swap and trade yeah absolutely the experiment now has been going on for nearly 10 years and after 10 years do you think it’s a success why if if you
Do well I I do think I mean it’s a success um because it still exists um I mean that that’s that’s one sign for success is lasting 10 years in this market I think we can we can maybe agree on that um and if you look at other
Market players that have um have appeared and disappeared especially before and after the the big hype uh cycle and the big boom of crypto and if you look at that I mean um maker maker is still around and some of the some of the other stable coin um
Providers or issuers are also still around um if they have figured out a a a functioning mechanism um and not like Tera Luna for example which obviously had not figured out a stable mechanism to to keep um to keep a stable value so I think it is a success um I don’t I
Don’t yeah I I I think there there is of course always room for improvement and I think um that’s what they’re also doing right now going forward but yeah I mean simple answer would be yes that’s a success yeah terol Luna was such an interesting uh experiment that
Ultimately just imploded on itself you know and without getting into the where’s the what the wise whatever the the value of the US stable token which at one point looked like it was going to overtake die is gone and so like the idea of of maker still being here it is
A key point for Success right like it’s it’s this thing of saying hey you know who who’s who still has their hand up I’m still here right and there’s a very real uh uh part of that analysis of just going whoever is still breathing is a success
In many ways and and the crypto market and I I guess for many businesses right you know the average business worldwide fails within two years so if you talk about Makow just in a in the idea of being a business lasting 10 years just by itself is a a great success indicator
Whether you know you and I I stay away from making too much opinion on stuff but it is a indicator for sure um the the one thing that I find interesting that makerd has at least started touching their toes in in the past I think it’s been about 18 months is real
World assets um that was something that they had not done classically in fact I I had a a matter uh about two years ago that I tried to put you know get real basically work with maker to put like $130 million of liquidity in and at that
Time they were not situated to do that at all um and now that has changed they’re starting to try to have assets that are tied to the real world rather than just the digital economy um do you have any you know background on that change or am
I just uh you know kind of talking to the wind on that particular um no as far as I can see yeah that’s that’s absolutely true what what you say um and um yeah there’s always I think um in know looking at it through a broader
Lens I mean um picking collaterals is is not an easy task um and um so um it I’ve heard I’ve heard the founder of of maker like and say that they have historically not been super good at picking collaterals and um that’s why they’re focusing on it um right now to
Get better at that and they’re doing this with kind of a a spin-off the the spark protocol who whose um only almost only focus or purpose is to to Really um make sure that um that they pick the right collaterals that yeah how how closely tied is the spark per two maker
Is it a specific like a separate protocol together or is it a you know a a a child company or how does how does that function in relation to maker um as far as I understand it it’s a subow so um it’s a dow that has their
Own um their own I they’re tied to maker Dow of course they they’re still part of the maker ecosystem but they have their own um governance they have their own team team um they have their own um their own focus and their own purpose and um I think it’s that’s also part of
The bigger plan that they’re having right now is to um to spin out more of these um subd Dows because maker has um um saying this from an outside perspective but maker has become very very complex and if you’ve ever tried to look anything up like in their Forum
You’ll see that it’s it’s very hard to um understand what’s going on and I think um that’s that’s what they’re trying to do now is to um to reduce complexity and um spin it out into these subd and um trying to give them like a purpose and fig figure this out so
Trying to spin off the the features of of maker so to speak into into sub subs and I think that’s um what the spark protocol is too yeah it was interesting when when I had that matter uh you know it’s been like I said two years ago the
The conversation I had uh was at the time if if you want to do this just send a message to somebody in Discord and and you know like that wasn’t very useful right like it may be a dow um but at the time it was very difficult to try to get
Something done with maker has that changed because of these subd Downs is it is it more uh friendly to working with outside businesses or is it still you know still trying to find its footing um I think that is absolutely the plan and the hope of of the of the
Endgame plan as they call it um to make it overall U more user friendly um and easier to work with and reduce the complexity and make it more accessible so that people know where they can actually go um and try things um with these new
Subs um which is as I said before part of a much much bigger plan um and the plan to to try to make this whole ecosystem and the the system of stable coins much more accessible to the to the market as a whole and um which will also um involve uh another stable
Coin which is currently called new stable um and there’s lots of planning around that and so we’ll all we’ll all see how this how this works out um but yeah definitely um I don’t I don’t have that that same experience that you have but yeah I can
Imagine it’s it has been very difficult to get in touch with people and um to to um to get some projects done because everything is is is done in this very complex and and yeah almost opaque way that is so difficult to understand for an outsider and I think that’s that’s
What they’re what they understood too and what they’re working on currently if I understand the the whole the whole end game plan correctly So based on what you’re telling me what do you think’s next for maker I mean I I know they’re talking about this idea of
An end game of this is what maker is you know gearing up towards as far as this is what we’re hoping maker will be next but what what is you know beyond that next what’s what’s beyond the endgame beyond the end to have maker itself completely decentralized like really fully
Decentralized they call this the the Bitcoin State like making it um it meaning the the rules that that it follows completely decentralized and immutable they call it the Bitcoin State um so everybody knows what it does and what it doesn’t do and there’s nothing you can change fundamentally about that um I
Think that’s what m the vision for maker maker itself um so far make her the governance token and make her the die the stable coin they will always exist and they will um they will try to get to full decentralization and um the next to that
There will be a third brand so to speak if I understand that correctly um which has not been named yet so this is going to be a surprise um currently I think they’re currently working with brand agencies to find um yeah a new strategy for that and um I touched on this
Earlier because I think the whole idea is to to keep maker as it is and keep d as it is but add to that kind of a third um third path or a third um brand that makes it um super easily accessible super um user friendly um and um
Um much more uh it facilitates the on boarding much more easily than it has been so far so that I think the goal Beyond maker um what it is now is to um get to the like the the retail investor and the retail people so make it really
Really easily accessible the whole defi system I think that’s that’s what’s beyond um the the endgame plan and um yeah there are multiple strategies to to get there and we we’ll see how this how this will going to work out I find it interesting that you know
Part of it is maker has very specifically led to some of my opinions about Dows and efficiencies um you know there’s there’s things to be said for Dows on success rates and like Bitcoin is the ultimate you know um experiment right like it continues to be the ultimate experiment
To the point that like countries like El Salvador are using it and they’re so proud of themselves right right now like uh bu was just talking about you know how El Salvador has profited handsomely from their Bitcoin play um you know it it is a you know
Kind of like the the preow as it were Bitcoin you know um and I think that’s a a very interesting uh end goal for maker um I also see that there’s there’s a there’s a difficulty with Dows though too right like the the more decentralized you get the harder it is
To be userfriendly you know from and even Bitcoin sees that right like Bitcoin even to today is not like super user friendly for somebody who doesn’t you know hasn’t ever like purchased a token before they’re going you know like well I got to get on coinbase and now
That I have it on coinbase I own it right and you’re going well you know um so it it does take uh some you know uh education for sure um but in the Dow space it’s it’s interesting to compare uh maker to the the end game that
Bitcoin seems to be um and I I think that it’s it’s a gosh it’s it’s a very kind of uphill battle to get to that moment right it’s it’s hard to uh turn something that even Bitcoin it’s hard to turn something that was centralized into something that is fully decentralized
The only way they were able to do that with Bitcoin was literally to like Satoshi is like nobody knows who he is you know unless you’re Craig wrighton and you say that you’re toi um you know so it it’s it’s hard to find that moment right that that Bitcoin
Isation or you know dazation I guess is another way to say it yeah I would I would agree 100% I think that’s a very ambitious goal and um I think Dows um apart from the decentralization aspect um and many dolls are are not not decentralized they still have a like
A special core team and um a lot of voting power that’s crewed within this team and so they’re not really decentralized um apart from that you also have these these other issues I mean the the the entire idea of a d is a cooperation collaboration between humans
And when you involve um people then you will always have drama and politics and power grabs and um fights and different ideologies and different yeah different Visions etc etc so you always have that alignment problem and I think that’s also part of the part of this end game
Is to figure out if if there is a way to really organize people in a way um structured by this rule Set uh this massive rule set that make um and um figure out if if it works right if there is a way to make it really work to
The benefit of everyone and not to the benefit of a few and I think it time time will tell right and if you’ve ever been a member of a dow even if it’s small one not like massive as as makeer or any other bigger D you you know what
I’m talking about right it’s it is legitimately difficult and um voter apathy is a thing right everybody joins super enthusiastically and then when you want to get to work and um and uh make proposals and want people to vote on things and you will find out that people are lazy or they
Don’t want to take the time or they don’t look into it properly and it’s it’s hard to incentive to find the right incentive mechanisms to participate right and I think that’s all that’s all part of the whole game you know the like the Q protocol we
Have we have Alice on here as well is a protocol that’s shaping a doubt in a slightly different Manner and like a lot of times as an attorney I I actually you know generally advise to not be a pure Dow in the sense of um
How to start a business you know a pure down is very very difficult and it’s uphill battle and you do have that idea of what you’re calling voter apathy um for me particularly the biggest issue with voter apathy is not voter apathy it’s it’s that incentive structure on if
If I can’t see a benefit from my time why am I going to spend the effort and it’s not just you know like me as an attorney I mean you’re an attorney as well we we you know our our time is is literally our money um but for other
People that are trying to you know take part in a dow system they’re they’re naturally going to be inclined to go to the Dows that they see the most benefit in even if they’re part of 200 DS they probably spend the majority of their time in one or
Two um and I I think that’s a very natural thing and it’s not apathy really it’s I’m I’m heading towards a thing that has the most incentive for me um with the Q protocol they they’ve structured the they they have a a theory called a a root
Panel um and uh all you know to let everybody know I I am one of the root panels so you know I’m going to not say too much about it but I’ll let Alis speak the the root panel idea is kind of to decentralize some aspects of a dow but
Not to decentralize them to you know 10,000 of your best friends but to you know uninterested third parties I mean am I kind of describing that right Alice yeah yeah exactly uh the current size the maximum size of the root note panel is 27 people we’ve got 25 people on
Right now and the idea is that with any sort of voting proposal that’s ongoing arising from the Q toen holders and voted in by the Q toen holders the due process that must be followed through the Q Constitution that is guaranteed by the root nodes and of course root nodes
Are asked to put up a certain amount of stake to have skin in the game and to have interest in the stability of the protocol but they themselves are are supposed to be um like you said disinterested parties and that that’s a part actually ni I wanted to ask you
About I found it really interesting because the on the Q protocol we have the Q Constitution and we have the rudo panel but they are known they’re known they’re real people they’re real entities that are voted in and the H Constitution asked that they provide a certain number of
Information to the Q toen holders but with maker new constitution just looking at it they have these alignment conservers right and which are asked to do there I say sort of a similar function in preserving sort of the values of makeup yet I don’t see an element of you know credibility and
Verification at to p and I’m almost certain that at least the aligned delegates are allowed to be anonymous or please correct me if I’m wrong but I I was curious as to what you thought about that sort of design um yeah great question I mean
That’s a it’s a it’s a bit of a similar um system but not quite the same as a root node panel I think um I think um you can delegate your votes to um to these um what’s it called committees um and um I’m not on the question of anonymity
Or not I’m not 100% sure if they’re allowed to be anonymous or not um but I yeah I think it it is similar in a way um but it’s not 100% the same as as as the Q um the Q system does it yeah question let me ask you a question Na
And because of like my way of thinking you know like just the question of anonymity not so much maker or Q or anybody else but in the world of defi you know you have this idea of you know the code the code the code the code but we’ve seen drug
Pools so much in the past what 36 months and that is all because we had this theory of code code code code code rather than who who who who who you know like do you have any uh thoughts on your preference for projects generally speaking on whether
Or not they are ran by Anonymous faces versus whether they’re you know people that have identified themselves yeah I mean this is a very specific thing for the crypto space right people being completely Anonymous and I think it’s it’s part of the philosophy um so I think yeah we see
This a lot um I mean to your point I’ve also seen Rock pools like out in the open under like bright Daylight by people fully docks with their full names they’re completely I mean you know where they are um you know where they live basically and they still do it like out
In the open so um there I think that’s a general problem apart from um being anonymous or not I think that’s more of a general problem in the space that it really attracts Bad actors um apart from being anonymous or not um and um so it’s really really
Difficult I don’t have any like general advice um I I I personally prefer um people who are at least identifiable in some way and depending on you know your level of involvement with the project um I mean it requires um more um more or less um yeah um how would you say
That personal knowledge of of the actual person um I think I I would totally prefer to know the people that I’m working with um especially when it comes to clients I mean we have to identify them by law there is no I mean there’s no space for personal preference um at
Least in Germany you have to do that um but yeah I mean it is a real problem I absolutely agree um I think there is I mean it it is a it is a it is a benefit but it can also be um a real problem if
People just if people are just able to disappear right and also maybe as a as as a last um comment on that I mean you’re not as Anonymous as you think you are I mean I’ve um I’ve learned uh about a kind of almost professional negotiator
With hackers um who is very very um Savvy and knows the industry and very well who specializes in finding hackers and um yeah you’d be surprised how easy easy it is um to be found even if you think you’re anonymous well they used to say the same thing with like uh bit
Torrent that bit torrent was you know private and you know like you were safe and then you know you had how many years of raia lawsuits you know the music industry the mo movie industry and you were not private at all with that being said this has been Josh hail joined by
Alice Jang and nikah Schmidt on Beyond cod’s law dissecting decentralized governments and we thank you for your time and we appreciate you listening thank you again for spending a little bit of time listening to Beyond cod’s Law hi this is Josh hail and you’ve been listening to Beyond cod’s law where we dissect decentralized governance
1 Comment
New experiment of dai is happening on pusechain with forked copy from eth when chain was created… Highly speculative on it reaching 1 dollar