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Risk #10 - Special Edition: a16z Investment - 9/27/2018

Introductions

  • Rich, Steven

What does the sale do for MakerDAO and for a16z Crypto?

  • Creating a new blockchain economy for the first time, where we’re running up against many incompatible local jurisdictional legislation
  • Regulators have a primary incentive to protect consumers, and they are trying to understand how to correctly distinguish risks from new types of opportunities
  • a16z has specific knowledge on the incoming process navigating the regulatory framework
  • Bridge between the current technology environment to bring cooperation between their goals and ours
  • Regulation will be an ongoing process to show transparency and compliance, not a one-time rubberstamp

What types of relationships will the DAO have with a16z?

  • True sense of partnership:
    • Sounding board
    • Loudest cheerleader
    • Butting heads potentially, to identify the root problems and determine the best solutions
  • Uncover as much uncertainty possible
  • How do we interact with their other portfolio companies?
    • Any value added opportunity will be mutually beneficial
  • Their firm has a huge network where we can find many resources

What kind of signal does their interest show to the space and the broader technology community?

  • Gives legitimacy to blockchain and crypto with their Crypto division and it's investment in Maker
  • Making the realization of Maker's involvement facilitating this new economy more tangible to the outside

What specific legal challenges are we facing for MakerDAO or the Foundation?

  • Its more a conundrum of unknowns that we’re trying to uncover rather than a specific challenge we’re attempting to navigate
  • Lots of speculation about both directions of the (token-categorization) debate, but the ambiguity remains
  • Need to find clarity as soon as possible or the blockchain economy will continue stalling
  • That clarity can gives others in the space context about one workable way to effectively establish operations

What are the responsibilities of the Foundation vs MakerDAO?

  • MakerDAO hasn’t been deployed as a fully-capable battleship yet. It’s still currently being built in harbor.
  • Token holders are sailors on the ship, as the foundation continues building
  • The roles involved in how to run the ship are different from the processes involved in building it
  • Keeping the ship running will be up to the MKR holders once empowered
  • It’s not a clean switch, needs iterative testing
  • Once up and running all decisions will need to be made through decentralized governance, including who will deliver the services, how they will be delivered and when

A substantial amount of collateral will be locked in CDPs in the long run. Maker will have due influence over Ethereum governance as a whole and it could be construed that a16z is purchasing a seat at the table with EF/Ethereum through this. Tweet Referenced Can you share a take on this?

  • Scientific governance relies on diligent governance of the system
  • It must focus on it’s singular purpose to benefit the organization
  • Conversations are ongoing about the results of contentious forks and how dapps will select the majority fork

Would it be beneficial for Maker to fund another core developer group? Having separate clients?

  • Ultimately competition would be driven through incentives to create the best implementation
  • Moving to a new (slightly better) version would be trivial with a motivated community
  • The comparison is a bit difficult since contracts are deployed once and can’t easily be actively updated

Has a16z shared any plans about how active they will be with the governance process?

  • Extraordinarily active. Will be leading the charge on uncovering the best tactics.
  • Joining the crowd as some of the most passionate about the project

Was the impact on the valuation of price considered when negotiating the details of the deal?

  • Money is not the only value being delivered by a16z in this deal
  • Their full partnership will pay visible dividends
  • The results will be clear as the ecosystem continues to develop
  • Two way street: We can teach them about the rest of the ecosystem and open them up to significant opportunities as well