It was a sense of disappointment that pushed Danish entrepreneur Rune Christensen to start his own crypto project. In the years after Bitcoin was created in 2009, he quickly became convinced of the “immense potential of blockchain” but was unimpressed by early projects: Most people were only out to turn a quick buck.
In 2014, Christensen set about trying to build “something useful,” he says, something that “mattered for the real world.” The result was DAI, a stablecoin whose value doesn’t fluctuate from hour to hour like a regular cryptocurrency but instead is pegged to the US dollar, giving people a way to make purchases safely.
To help govern the stablecoin, Christensen and cofounder Nikolai Mushegian (who is recently deceased) established MakerDAO, one of the earliest examples of a decentralized autonomous organization (DAO)—a new type of entity with no central leadership. Unlike a traditional business, MakerDAO puts every important decision to a community vote, open to anyone who buys a special kind of token called MKR. It’s a niche concept, but there are roughly 6,000 DAOs in operation—and MakerDAO is one of the biggest, worth almost $6 billion at the height of the value of the MKR token.
In the spirit of decentralization—a guiding principle of almost all blockchain-based projects—Christensen says he always planned to step aside once the DAO had become self-sufficient, but when he tried, it was always rudderless in his absence. “I went through this process over and over again,” he says, “always thinking we just needed to get over the next hurdle.” But eventually, Christensen realized that without someone to guide the ship, a power vacuum forms and the community begins to fracture.
In May, after an absence of at least three months, Christensen returned with a radical plan to set MakerDAO once and for all “on a path toward a truly decentralized equilibrium.” Known as Endgame, Christensen says it’s his “last attempt to fix” MakerDAO and a “make or break moment.”
So he asked DAO members to vote for a proposal that will mean existing departments will be disbanded and replaced with “MetaDAOs”—mini-DAOs housed within the MakerDAO mothership—and the project will reconfigure its finances. The goal is to “unbundle bureaucracy” and protect the DAO from forces outside its control, says Christensen, setting the stage for long-term growth.
The vote on the restructuring of MakerDAO took place over two weeks, between October 10 and October 24. The community faced a difficult choice: support the plan of MakerDAO’s enigmatic cofounder, which few really understood, or embrace the imperfections of the status quo. They chose Christensen.
Greg Di Prisco, who previously worked at the Maker Foundation (the entity responsible for kickstarting MakerDAO), goes as far as to say that Christensen is the only person to understand Endgame. “I didn't vote, mainly because I find it incomprehensible and therefore couldn't go so far as to extend my explicit support,” Di Prisco says. “I can't even tell you what a MetaDAO is from a mechanical [or] practical perspective.”
The success or failure of Endgame will say a lot about whether DAOs can ever function as intended: without leadership. Christensen hopes it will “shatter all expectations” and bring about “a renaissance” in the crypto industry by setting an example for others to follow.
Ironically, however, the vote itself called attention to the imbalance of power inside MakerDAO—specifically, the outsize influence of Christensen. The proposal sailed through its poll with what looked like majority support (80 percent), but in reality “there were only two voters that mattered,” says Sébastien Derivaux, who handles asset and liability management for MakerDAO. That’s Christensen, who is said to own roughly 10 percent of the total MKR supply, and venture capital firm Andreessen Horowitz, which acquired a 6 percent share in 2018.
On paper, the system is decentralized, but low turnout means only 10 to 15 percent of voting power is typically recorded in any given poll, putting the power in the hands of whales like Christensen (and to a lesser extent Andreessen Horowitz). In a Twitter thread, Derivaux explained that the MakerDAO cofounder had a hand in almost three-quarters of the votes on the historic Endgame proposal.
“MakerDAO is very political. [Endgame] was pretty much forced through by one man’s economic power,” says Danny, a veteran community member and MakerDAO contributor, whose name has been changed to protect his anonymity. He claims Christensen’s return has “recentralized” the project and that it can no longer be described as a functioning DAO.
Kianga Daverington, founder of ACREinvest, a MakerDAO delegate (someone to whom people entrust their voting tokens), also believes the return of Christensen has damaged the DAO. She has written previously that MakerDAO “appears to be captured and entirely controlled” by Christensen, whose return marks the end of a “brief dynamic period of flourishing openness and organic decentralization of decisionmaking.”
Daverington also contests the characterization of VCs in some portions of the MakerDAO community as a detrimental force for centralization and of Christensen as the only person able to counteract their “evil” designs, which she says “couldn’t be further from the truth on either count.”
Andreessen Horowitz, which delegates some of its voting tokens to ACREInvest, was against the redesign of MakerDAO. The firm declined to elaborate further on the “organizational risk” described in its forum post but has suggested that Endgame will do little to address the DAO’s structural problems.
Christensen, for his part, is willing to admit he holds too much power, something he “wanted to avoid.” “But I have no choice but to try to make it work … because I simply don’t believe the community will come up with a solution that will last,” he says. The only alternative would be to give up on MakerDAO entirely.
Even ignoring the size of his MKR holdings, Christensen is quite able to whip up support for his designs from the wider MakerDAO community. Although he has his critics, Christensen is revered as one of the earliest pioneers of the decentralized finance movement and is well-respected for his capacity for abstract thought.
Speaking to Christensen, it’s easy to understand why people are willing to gather in his corner, whether or not they understand his thinking. The unkempt hair and soft voice have a disarming effect and, even though we didn’t follow everything he was saying, his enthusiasm and earnestness lends him credibility.
Something on which everyone can agree, whether fans of Christensen or not, is that the existing governance system is in need of reform. “There are a lot of teams, and it is not always easy to get a sense of the value they are providing,” says Derivaux, and MakerDAO is paralyzed by an inability to reach decisions quickly. Less clear is whether Endgame will resolve these problems.
“The impact Endgame will have is really difficult to say,” says Johnny_TVL, senior research analyst at Messari, a specialist crypto research firm. “Certainly, if fully executed, it seems like it would adeptly decentralize the protocol. But given the complexity, it is unlikely to work exactly as advertised.”
To characterize Endgame as complex is perhaps to put it too lightly. In a Substack post, Luca Prosperi, who works in lending oversight for MakerDAO, described Christensen’s Endgame posts as “very detailed, extremely articulated, unforgivingly frequent, and excruciatingly long.” To comprehend the latest version of the plan, he says, a “Tolkien-esque glossary” is required.
Despite his doubts during the voting process, Di Prisco is willing to put faith in the MakerDAO founder, who he describes as “smart and honest.” He says he has come to terms with the fact that, often, “the founder is the only one who can really picture things end to end.”
Christensen admits he is probably the only one to grasp the Endgame proposal and its implications. “In some ways, I don’t even understand it fully,” he says. “I can’t predict all possible future paths.”
“But the current status quo is infinitely more complex; you can’t see the wood for the trees. But with Endgame, things start to crystallize to a point where you can at least count the things you need to understand,” says Christensen.
At the center of the conflict within the MakerDAO community are questions around whether complete decentralization can ever be achieved—and if it’s even a good idea.
Some believe decentralization should be the DAO’s single priority, as the only protection against the overreach of governments and corporations, while others are willing to compromise on decentralization to make DAI accessible to the largest possible audience.
But Danny says the debate has been hindered by “a real lack of intellectual rigor and consistency” around the concept of decentralization, which has become a cliché used to signpost a general philosophy rather than a clearly defined objective.
In spite of their admiration for the spirit of the MakerDAO project, none of the community members that spoke to WIRED (with the exception of Daverington) claimed to be optimistic about the long-term viability of DAOs as a model for organizing human effort. Even Christensen says he had almost given up on the concept, until Endgame reignited his belief.
“I think DAOs, up to this point, are pretty much a failure,” says Di Prisco, who suggests that the problem has to do with “the architecture of the protocols and expectations people have of governance.”
Danny, who is equally pessimistic, says the biggest problem is the failure to get enough people to vote—and asking them to vote on highly complex proposals. The result is a system that pushes people to fall in line behind a figurehead, like Christensen, and therefore begins to resemble a traditional business ever more closely.
The fundamental question is whether DAOs can be organized in such a way that the best ideas rise to the top, but Danny says that’s simply not the case here. “MakerDAO is as far from a meritocracy of ideas as you can get.”
