Major VCs are out, what is the future of MakerDAO?

The original author: Deep Tide TechFlow Cleaner

As a DeFi OG, MakerDAO returned to the center of the encryption stage again this year through the narrative of RWA.

What everyone saw was a strange scene: the core investor of MakerDAO, the legendary Silicon Valley venture capital a 16 z continued to sell MKR. People and investors launched a long-short duel.

Rune has been selling LDO since November 2022 to repurchase his own tokens, and used ETH and DAI to buy MKR in the last two times. As of July 17, the two addresses currently hold a total of 123 , 893 MKR, accounting for 12.6% of the total circulation of MKR (977, 631 MKR).

Today, the sell-off of major VCs has come to an end.

Recently, a 16 z finally sold the last part of its balance in MakerDAO. At this point, a 16 z, Paradigm and Dragonfly finally sold out their tokens, and MKR relieved the burden of VC.

According to the statistics of encryption researcher 0 x Ramen, these three VCs once jointly held about 11.5% of Maker tokens, as follows:

a 16 z：

• Purchased in September 2018 for $15 million;
• 6% of total supply;
• Average price: $250.

Paradigm + Dragonfly：

• $27.5 million in tokens purchased in December 2019;
• 5.5% of total supply;
• Average price: $500.

Dragonfly was the first to start selling its tokens in January 2021, but most of the sales occurred in April 2021, when MKR was near its $6,000 high.

Results: The average selling price is $3,800/MKR, which is 7.6 times its initial investment, performed well, and sold slowly when the price rose.

Paradigm was the last of the three VCs to start selling, selling 80% of its MKR token holdings at prices above $800 starting in March 2023. The rest recently sold for about $1,100.

Results: The average selling price is $900/MKR, which is 1.8 times its initial investment, basically selling at low prices.

So far, a 16 z has conducted three waves of selling:

• **March 2021: ** starts selling 20% of its holdings;
• August-September 2021: sells 26% of its holdings;
• July 2023: Sends its remaining 32,000 MKR to exchanges for sale.

Results: The average selling price is $1,800/MKR, which is 7.2 times its initial investment.

32,000 MKR on a 16z combined with Paradigm's recent sell-off equates to nearly $40 million in selling pressure. Despite this, the price of MKR is still up by more than 30%.

So, why are a 16 z waiting to rush to sell MKR at the moment?

An important reason is that a 16 z opposes the MakerDAO founder's "Endgame" plan.

In June 2022, Rune, the founder of MakerDAO, proposed the Endgame Plan, which includes four main contents: establish the complete decentralization of MakerDAO; improve the liquidity of Dai and stabilize its interest rate; improve the sustainability of the agreement, Reduce system risk; improve decentralized governance and DAO operations.

Rune plans to break up MakerDAO into smaller, supposedly more decentralized units called MetaDAOs, and is working to bring real-world assets like bonds and government treasuries held in Maker reserves into MetaDAO, separating them from protocol decisions.

Endgame plans to launch 6 MetaDAOs at the initial stage, and each MetaDAO will issue Sub Token.

Although this proposal was supported by more than 80% of community members, the investment institution a 16 z firmly opposed it. Before that, a 16 z owned a large number of MKR tokens, so it had voting rights and influence on the final approval of the proposal.

Porter Smith, a partner at a 16 z, once stated in a memo that he advocated for MakerDao reform to increase the degree of decentralization without hindering growth and complying with the current legal and regulatory environment, rather than decomposing the governance structure of the agreement. It is a smaller unit of MetaDAO.

"The core unit structure may already be legally decentralized, and the introduction of MetaDAO may not change this, nor lead to more organizational resilience from a strict legal perspective."

Not only the Endgame plan, but also the conflict between MakerDao founders and VCs has been fully publicized in 2022, and a governance battle has been staged.

In June 2022, a governance vote was held on whether to approve the establishment of the Maker Loan Oversight Core Unit (known as LOVE).

About one-third (approximately 294,000 pieces, worth approximately $300 million) of MKR circulation chose to approve LOVE, and the top three "yes" votes were all VC, a 16 z, Paradigm, and ParaFi.

The party that chose "no" eventually won with about 60% of the votes, which is the founder Rune's camp.

In the Maker community, this struggle has been described as a well-planned coup by a group of venture capitalists who don’t spit out their bones. In the end, the VCs were successfully defeated by the joint efforts of Maker founders and community members. The overall victory of decentralization has been achieved.

This description seems simple, and the governance war behind MakerDAO has also become a stumbling block hindering its development. Now that major VCs have cleared their positions, what will happen to MakerDAO in the future?