used in other DeFi projects. Advocates of decentralized finance
aspire to do more than just replicate the current system: They see
a world in which DeFi projects collaborate to create business models
and products that couldn’t exist without blockchain technology.
“Imagine being able to develop new financial markets that
previously needed a multimillion-dollar bespoke contract
designed by an investment bank, but with a few points and clicks,”
says Joey Krug, a DeFi entrepreneur and co-chief investment
officer at Pantera Capital, the first U.S. investment firm focused
on Bitcoin.
MakerDAO has a second token, MKR. A bit like shares in
a public company, it gives holders voting rights on such matters
as how much collateral is required to borrow Dai. Holders are
rewarded for sound management with money drawn from fees
charged to borrowers. The value of these tokens could be diluted
if loans aren’t repaid. There were $517 million worth of MKR
outstanding as of Sept. 19.
Schap says that if the MakerDAO system works as envisioned,
it will be like a decentralized bank, taking deposits, facilitating
lending, and managing risks. It also functions like a central bank in
that it sets interest rates (in the form of what is called a stability fee,
which is designed to help Dai track the dollar).
Before division and disenchantment set in at MakerDAO,
Schap says, she felt she was involved in a startup that wasn’t only
reinventing finance but also creating a new type of corporate
structure—impromptu brainstorming, a flat organization, ideas
flying in from people regardless of job title or area of responsi-
bility. All this, she says she believed in those early days, wasn’t a
function of good personal chemistry; it was Maker’s DNA.
Or maybe it wasn’t. Her growing unease was thinly veiled in
a series of tweets she sent on her one-year anniversary there. One
of them said: “I believe in a global, borderless, decentralized money.
I believe in transparency and open governance. I also believe that
we are human beings, we are flawed, and we have to set aside our
selfish desires to make these things work. Because this work is worth
doing. This matters.”A FEW WEEKS EARLIER, Christensen, who co-founded MakerDAO
in 2014, had issued his ultimatum in true counterculture style.
Christensen is a 28-year-old Danish entrepreneur. While still in
college, the Mandarin speaker co-founded a company that recruited
European teachers to work in China. Taking inspiration from the
sci-fi film The Matrix, he gave his MakerDAO development team
a choice. The red pill: Get on board with Christensen’s vision, whose
“main focus,” as Milenius described it in his post, “was on govern-
ment compliance and integration of Maker into the existing global
financial system.” The blue pill: If you feel differently, finish your
work and then leave.
Taking the red pill doesn’t mean you’re a sellout to main-
stream finance, Christensen says: “I reject the idea that I’m not an
idealist.” He says he believes that startups like MakerDAO have
few examples to follow, and to succeed in a fast-paced industry,
they need to adapt to the real world.
“The big journey and challenge is how to deliver this vision,”
he says. “It’s quite easy to write a white paper and code, but to get
a real live decentralized finance system going, you need to dealCumulative value locked up in
decentralized finance projects
tracked by DeFi PulseBuying In
Units of cryptocurrency locked up in decentralized finance projectsEther Dai1218624m9/16/190300$600m9/16/190
8/2/17 8/2/1780 BLOOMBERG MARKETS