Today, the Maker Foundation is pleased to announce that the transfer of MKR token control from it to the Maker governance community is now complete. The MKR token contract is now 100% in control of MKR holders. With MKR holders now in full control of that contract, decentralized governance is the only avenue for changing MKR token authorizations.
This transfer comes on the heels of an MKR debt auction that not only serves to recapitalize the Maker system after market activity resulted in the accumulation of protocol debt, but is also an embodiment of skin-in-the-game decentralized finance. The Maker community responded quickly and decisively to a difficult situation, aligning their assets with their passions.
The transfer of MKR token control is, most importantly, the latest and most significant step yet toward complete system decentralization as the community embraces its larger, impending role in governing a self-sustaining DAO.
The Path Taken to MKR Token Control Transfer
From day one, safeguarding the MKR token contract has been the responsibility of the Maker Foundation and its predecessors. Originally, the Foundation planned to begin transferring control over MKR to decentralized governance after the successful launch of Multi-Collateral Dai (MCD). To that end, on December 20 of last year, just one month after the MCD’s release, a blog post was published, outlining the steps leading to the transfer of authority over the MKR token contract to Maker governance, and detailing the overall importance of MKR to a healthy Maker Protocol. On that day, control of the MKR token was handed to the contracts that control authority over the Maker Protocol and, therefore, to the Maker voting community. Since that time, the Foundation has shared control of the token with the contracts to ensure a successful handover. This morning, that shared responsibility ended.
“Today’s news is momentous. By completing its commitment to transfer the MKR token contract to MKR holders, the Maker Foundation continues to move toward a completely self-sustaining MakerDAO,” said Rune Christensen, CEO of the Maker Foundation. “And it’s just the beginning. We will continue to ready the community for complete decentralization in the weeks and months ahead.”
The Technical Details
Three steps were taken in the transfer process leading up to today:
- On January 10, 2020, the MkrAuthority contract was deployed on the Ethereum mainnet.
- Also on January 10, 2020, the deployer set the DSPauseProxy of the governance layer as the MkrAuthority’s root.
- On January 13, 2020, the Maker Foundation multisig set the token’s authority address to the address of the MkrAuthority.
Today the final step was taken: The multisig was used to set the owner of the MKR token to the 0x0 address. This means that full permissions on the token are controlled by Maker governance through the previously voted contract (MkrAuthority), which is the current Authority on the MKR token. This MkrAuthority is a special smart contract that grants MKR token access to the following contracts:
- The Debt Auction Smart Contract (to create MKR at the end of a Debt Auction).
- The Surplus Auction Smart Contract (to destroy MKR at the end of a Surplus Auction).
- The Burner Contract (to destroy MKR used to pay Stability Fees for SCD).
- The Governance Contract, or DS Chief, (to control future permission changes to the MKR contract).
Embracing New Authority and Responsibility
A strong, active, and inspired governance community is critical to the growth of the Maker ecosystem and further advancement of the DeFi (decentralized finance) movement. Complete decentralization depends not only on the community’s commitment to guard the MKR token now in its control, but also to the purpose of core governance.
Simply put, the community must remain deeply engaged and continue to vote smartly and often. While voter apathy can threaten any election process, it can do harm to a project’s decentralization efforts. Without enough community passion and well-intentioned participation, a community-governed system can become vulnerable and struggle to succeed.
“I’m confident that a community known for its passionate engagement will embrace its new authority and help to educate new MKR holders on the governance process,” said Christensen. “Working together is critical to the success of decentralized governance and the future of the Maker project."
The Goal Is in Reach
Today’s transfer of MKR token control from the Maker Foundation to the Maker governance community is another big step toward complete decentralization. There’s more to do, however, as we continue down that path. In the months ahead, the Foundation will continue to prepare the community for a self-sustaining MakerDAO. In the meantime, review the Voter Onboarding Guide, including the instructions on setting up a voter wallet, and the MKR Token FAQs on Awesome MakerDAO.