# Protocol Scope Bounded Mutable Alignment Artifact ## Preamble ``` MIP#: 107 Title: Protocol Scope Bounded Mutable Alignment Artifact Author(s): @rune Contributors: Tags: endgame, scope-framework Type: General Status: Accepted Date Proposed: 2023-02-06 Date Ratified: 2023-03-27 Dependencies: Replaces: Ratification Poll URL: https://vote.makerdao.com/polling/Qmbndmkr Forum URL: https://forum.makerdao.com/t/mip107-the-protocol-engineering-scope-framework/19693 ``` ## 1: Scope improvement ### 1.1: The Protocol Advisory Council The Protocol Advisory Council is a group of Ecosystem Actors that have been approved by Maker Governance to carry out advisory work related to improving the content of the Protocol Scope Artifact. #### 1.1.1: Protocol Advisory Council Membership Management Members of the Advisory Council are directly approved by Maker Governance through a governance poll, and must fulfill specific criteria. ##### 1.1.1.1 The Protocol Facilitators must ensure that potential Advisory Council Members can apply to be approved by Maker Governance, using an open process with clear instructions as per *1.1.1.3*. ##### 1.1.1.2 Advisory Council Members must be Ecosystem Actors that are not involved in any business, political, or other governance-related activity that could result in a conflict of interest, either directly or indirectly. They must also have relevant skills for providing professional expert input on the content that the Protocol Scope is covering. ##### 1.1.1.3 The Protocol Facilitators must periodically, when it is relevant, review the Advisory Council Applications, and if they find applications that are suitable, bring them to a vote through an MKR governance poll. When Advisory Council Applications are posted on the Maker Forum, which must follow the template as per *1.1.2.4.1A*, the Protocol Facilitators have a review period of 30 days. During this review period, the applicant must host a Community Q&A and shall answer as many questions and doubts as possible. ###### 1.1.1.3.1 The Protocol Facilitators can extend this deadline, if necessary, by 15 days, provided they posted the justification in the Maker Forum. ###### 1.1.1.3.2 Once the review period is ended, the Protocol Facilitators must publish the response to the application on the Forum, along with a description of the reasoning behind the decision. If approved, the application will continue with the Governance Process and proceed to a vote as per *1.1.1.3*. ###### 1.1.1.3.3 Upon a successful vote, the Protocol Facilitators must arrange a service contract with the Advisory Council member, which must be made public. Approved Advisory Council Members are added to *1.1.1.6.1A*. ###### 1.1.1.3.4 Approved Advisory Council members have a term of service of 18 months from the time they are approved by Maker Governance. If desired, the Advisory Council Member can submit a new application for re-election when their term has between 60 and 30 days remaining. The re-election application must also fulfill *1.1.2* requirements and will open a new review period of 30 days where the Maker Community can provide feedback. The applicant shall again host a Community Q&A and respond to as many questions and doubts as possible. If approved, the re-election application will continue with the Governance Process and proceed to a vote as per *1.1.1.3*. ##### 1.1.1.4 The Protocol Facilitators may, if they deem it necessary, trigger a vote to remove an Advisory Council Member. If an Advisory Council Member has not done any paid work for the Scope for at least 1 year, then the Protocol Engineering Facilitators can choose to remove them at will, if they deem it necessary. ##### 1.1.1.5: Protocol Advisory Council Requirements ###### 1.1.1.5.1 Protocol Advisory Council members can be individuals, groups of people, legal entities, or companies. They can be pseudonymous or known entities. Protocol Advisory Council members must be aligned with the long-term goals of MakerDAO Endgame. ###### 1.1.1.5.2 Desired competencies for members of the Protocol Advisory Council, as many of the following as possible: 1. Proven experience as a smart contract developer or software architect in web3 and DeFi. Experience in building with COSMOS SDK is a plus. 2. Proven experience as a DevOps Engineer in node/client development. 3. Expertise in Layer 2 and Layer 3 technology. 4. Expertise in building and integrating cross-chain solutions. 5. Experience with processes that create high-impact, mission-critical software that has to perform under constant surveillance by possible attackers. 6. Expertise in smart contract security. 7. Knowledge of advanced cryptographic techniques, including Zero-Knowledge, Snark, and Stark. 8. Expertise in integrating and securing external data sources. 9. Experience in deploying, upgrading, and maintaining complex systems. 10. Passion for technology, innovation, and entrepreneurship. 11. Deep understanding of MakerDAO and the endgame. Intimate familiarity with the smart contracts that make up Maker Protocol is a plus. ##### 1.1.1.6 The current approved Protocol Advisory Council Members are recorded in *1.1.1.6.1A*. ###### 1.1.1.6.1A ¤¤¤ Current list of Advisory Council Members: - N/A ¤¤¤ #### 1.1.2: Protocol Advisory Council Recognition ##### 1.1.2.1 In order to be eligible for the Protocol Advisory Council as per *1.1.1.3*, an Ecosystem Actor must post a recognition submission message publicly on the Maker Governance Forum. ##### 1.1.2.2 The submission message must be cryptographically signed by the Ecosystem Actor address. ##### 1.1.2.3 The cryptographically signed Protocol Advisory Council Recognition Submission Messages must contain the information specified in *1.1.2.3.1* and *1.1.2.3.2*. ###### 1.1.2.3.1 The following text must be included: “[Name] Protocol Advisory Council Recognition" ###### 1.1.2.3.2 A timestamp recording the time and date that the message was signed. ##### 1.1.2.4 The submission message must follow the template *1.1.2.4.1A* ###### 1.1.2.4.1A ``` Title: [Name] Protocol Advisory Council Recognition Submission - [Ecosystem Actor Ethereum address] - [Cryptographically signed Advisory Council Recognition Submission Message] - Applicant's name: [Company, team, or individual] - Any other relevant identifying details: - Twitter: - Website: - Email: - Maker Forum: - Telegram: - LinkedIn: - Discord: - Github: - Other: - Presentation: [Introduction] - Ethos and Vision: - Team: [Founders and team members. Brief description of their skills and backgrounds] - Services: [What is your company specialized in? What kind of services do you offer?] - Experience: [A detailed history of relevant previous experience] - Client References: [Who are your clients, what projects have you done and can you show the results of any of them?] - Explain how your skills will contribute to improving the selected Scope: [Which specific aspect of the Scope do you intend to enhance, and what is the rationale behind your choice? How do you plan to improve the chosen aspect? Provide milestones, if applicable]. - Payment Details: [How shall the compensation for your contributions be structured? How many hours shall the work entail? Detail as much as possible] - Emergency Availability: [Would you be available on short notice to provide advisory support in the event of an unforeseen emergency? How short of a notice? What would be your hourly rate for emergency advisory services rendered?] ``` #### 1.1.3: Protocol Advisory Council Projects and Funding The Advisory Council is paid on a project basis to do specific work that improves all or specific parts of the Scope Framework. ##### 1.1.3.1 Entities are encouraged to submit applications with the intention of enhancing a specific portion of the Scope Framework. Any entity can notice a problem in the Scope or something that can and should be improved and apply to undergo a process to suggest improvements. There are also sometimes specific pieces of advisory work listed in *1.1.3.2* that can be taken on by applicants. The Protocol Facilitators should diligently encourage participants possessing relevant areas of expertise to actively engage in this process to the fullest extent possible. Accordingly, once this MIP is successfully passed, it is imperative that the Protocol Facilitators promptly post a Request for Applicants to the forum within a period of 30 days. The Protocol Facilitators may choose to utilize a Peer-to-Peer recruiting process, which involves allocating a portion of the Protocol Advisory Council budget to incentivize ecosystem participants and community members to actively seek out applicants, providing comprehensive explanations of the process. ##### 1.1.3.2: Advisory Work for Protocol Advisory Council Members - Provide support on bridge design in the form of an audit / second look. This advisory work should not exceed a 100,000 DAI budget. - Provide support on NewChain design / development principals in the form of an audit / second look. This includes a second opinion on the purpose and necessity of NewChain. This advisory work should not exceed a 400,000 DAI budget. ##### 1.1.3.3 Each Quarter, if they deem it necessary, the Protocol Facilitators must solicit proposals and find one or more suitable Advisory Council Member to perform a project that will result in output that can be used to improve the Scope Artifact. This work output will be presented to the AVC Subcommittee Meetings as input for their Aligned Scope Proposals. As many AVCs as possible should be supported this way, prioritized by the Protocol Facilitators. The Protocol Facilitators must communicate in the first 15 days of a quarter if they believe no Advisory Council work is needed for that quarter. ##### 1.1.3.4 In case an ambiguous, uncertain or challenging situation arises related to the Scope Framework, the Protocol Engineering Facilitators may publicly notify the Advisory Council Members to submits proposals for projects that aim to reactively specify the language of the Scope Framework to take into account the specific situation. The Protocol Engineering Facilitators can then directly propose the change to the Scope Framework in a weekly governance poll. ##### 1.1.3.5 The Advisory Council may produce work output that is not directly compatible with the formatting of the Scope Artifact. In this case the Protocol Facilitators must either transcribe it themselves, or hire an Ecosystem Actor to perform the transcription. This role does not require pre approval by Maker Governance. #### 1.1.4 The Protocol Facilitators may produce advisory input on the content of the Scope Artifacts themselves, as long as it is focused on improving process and governance content. They are prohibited from providing unilateral input on expert subject matter content. #### 1.1.5 The Protocol Facilitators have a budget available to pay for Advisory Council Projects per quarter. All spending must be limited to only what is deemed necessary and with a high probability of producing clearly measurable value, and this must transparently be accounted for in a forum post at least a week before any transaction occurs. The budget is contained in *1.1.5.1B*. ##### 1.1.5.1B ¤¤¤ **Applicants should note that budgets for Advisory Councils are intentionally accommodative across the board in order to avoid having to delay by a full monthly governance cycle in unforeseen circumstances. They are not meant to be fully spent, and attempts to spend full budgets are less likely to be approved.** The Advisory Council project budget is as follows: **500,000 DAI available as a one-time only budget** ¤¤¤ ### 1.2: Protocol Scope DAO Toolkit Integration The Protocol Scope DAO Toolkit module must be built to give a full overview of all smart contracts, code and other technical items and parameters that are relevant to understand the security and technical architecture of the Maker Ecosystem. The Protocol Scope must continue to develop ways to integrate access to the Scope into the DAO Toolkit. ## 2: Core Tokens The two core tokens, Dai and MKR, play the central role in the usability and tokenomics of the Maker Ecosystem. ### 2.1: Dai Stablecoin Dai Stablecoin is the Stablecoin product of the Maker Protocol. It is designed to remain stable against the U.S. Dollar, and its supply is regulated through the PSM and the Allocation System, as governed by the Stability Scope. #### 2.1.1: NewStable Upgrade In the Endgame Token Launch Phase, NewStable is launched, which is an upgrade to Dai with new additional features, including Token Rewards. Dai is upgradeable and downgradable to and from NewStable at a rate of 1:1. ### 2.2: MKR Token MKR is the governance token of the Maker Protocol. It grants voting rights in the Maker Governance system. Its liquidity is boosted by the Smart Burn Engine (governed by the Stability Scope). #### 2.2.1: NewGovToken Upgrade In the Endgame Token Launch Phase, NewGovToken is launched as an upgrade to MKR. MKR is upgradeable and downgradable to and from NewGovToken at a rate of 1:24,000. ## 3: NewBridge NewBridge is a multichain system that enables native crosschain transfer of Maker Ecosystem related tokens to other blockchains, including Ethereum L2s and major L1s. ### 3.1: Multichain supported native mechanisms On all NewBridge Destination Chains, a number of Native Mechanisms can be included with the NewBridge deployment, these include: Savings Rate Mechanism (including sNewStable), and Token Rewards Mechanism and Activation Mechanism. ## 4: Savings Rate and Token Reward Mechanism The Savings Rate and Token Reward Mechanism increase the value for Dai Stablecoin users and NewStable users by giving them rewards for holding the Stablecoin. ### 4.1: Savings Rate Mechanism The Savings Rate Mechanism includes both the legacy Dai Savings Rate Mechanism, and the upcoming NewStable Savings Rate. The NewStable Savings Rate includes a built-in sNewStable mechanism. The Savings Rate is governed by the Stability Scope. ### 4.2: Token Rewards Mechanism At the Token Launch Phase of Endgame, the first Token Rewards Mechanism is deployed, providing NewGovToken Token Rewards to NewStable users. SubDAO tokens are also distributed through a Token Rewards Mechanism. ## 5: Activation Mechanisms Activation Mechanisms are methods to gain different types of rewards on NewGovToken and SubDAO tokens, designed to incentivize governance participation and long-term commitment to the Maker ecosystem. ### 5.1: NewGovToken Activation At Spark Launch NewGovToken Activation will become available. It can be done instantly by any NewGovToken Holder through the NewGovToken Activation Mechanism available on Ethereum Mainnet and NewBridge Deployments. NewGovToken Activation can provide NewStable Rewards and SubDAO Token Rewards. ### 5.2: SubDAO Token Activation At Spark Launch SubDAO Token Activation will become available. SubDAO Tokens can be Activated instantly by any SubDAO Token holder. It is available on Ethereum Mainnet, and NewBridge Destination Chains. SubDAO Token Activation provides NewGovToken Rewards. ### 5.3: Sealed Activation Sealed Activation becomes available shortly after NewStable, NewGovToken, and Endgame app launch. Sealed Activation is available both for NewGovToken and MKR holders, with 1 MKR counting as 24,000 NewGovToken. Sealed Activation Seals the principal tokens behind an Exit Fee. Sealed Activation provides NewStable Rewards or SubDAO Token Rewards. Sealed Activation users can also generate NewStable using the NewStable content of the Smart Burn Engine as collateral, based on how much equivalent of NewGovToken they have Sealed, as governed by the Stability Scope. #### 5.3.1: Sealed Activation Exit Fee The Sealed Activation Exit Fee starts at 5%, and increases by 1% every 6 months from launch, until it reaches its permanent long term value at 15%. The Exit Fee increases are introduced directly through an Executive Vote when needed. ## 7: Emissions NewGovToken and SubDAO Tokens are emitted for various tokenomics and bootstrapping reasons. For the reward mechanisms that are multichain, the rate of distribution is balanced across each NewBridge destination deployment to attempt to target an equal Reward Rate per supplied NewStable or Activated token. ### 7.1: NewGovToken emissions for tokenomics happen for two reasons, NewStable Token Rewards and SubDAO Token Activation #### 7.1.1: NewGovToken NewStable Token Rewards 600 million NewGovToken are emitted per year to be distributed through the NewStable Token Reward Mechanism. Every time a new SubDAO is launched and begins its NewGovToken SubDAO Token Activation Rewards, the NewGovToken NewStable Token Reward amount is reduced by an amount equivalent to the newly added rewards. #### 7.1.2: NewGovToken SubDAO Token Activation Rewards Every SubDAO that launches, starting with Spark, will have SubDAO Token Activation Rewards in NewGovToken at a rate of 80m NewGovToken per year. Whenever a SubDAO Launches, the NewGovToken NewStable Token Reward rate is reduced by 80m NewGovToken per year. ### 7.2: SubDAO Emissions Every SubDAO Distributes a total of 4.9 billion SubDAO tokens as its genesis emissions, used for Token Rewards, Contributor Bonuses, and other bootstrapping uses. #### 7.2.1: SubDAO Token NewStable Token Rewards Every SubDAO Distributes a total of 2.8 billion SubDAO tokens to NewStable holders receiving Token Rewards. The rate is 700 million SubDAO tokens per year for the first 2 years, 350 million per year from year 3-4, 175 million per year from year 5-6, 87.5 million per year from year 7-10. #### 7.2.2: SubDAO Token NewGovToken Activation Rewards Every SubDAO Distributes a total of 600 million SubDAO tokens to Activated NewGovToken holders. The rate is 150 million SubDAO tokens per year for the first 2 years, 75 million per year from year 3-4, 37.5 million per year from year 5-6, 18.75 million per year from year 7-10. #### 7.2.3: SubDAO Token NewGovToken Sealed Activation Rewards Every SubDAO Distributes a total of 600 million SubDAO tokens to Sealed NewGovToken holders. The rate is 150 million SubDAO tokens per year for the first 2 years, 75 million per year from year 3-4, 37.5 million per year from year 5-6, 18.75 million per year from year 7-10.