Inside Maker DAO: leadership conflict over direction fuels multiple departures

It hasn't been a stable couple of months for stablecoin project Maker, as insiders squabble over the future of the Ethereum project, sources close to project tell The Block.

Maker DAO, a non-custodial lending protocol that produces decentralized stablecoin Dai, has witnessed a faction break out in recent months to prevent the consolidation of power around its original founder Rune Christensen, those sources say. The aim of the faction, dubbed the Purple Pill, whose membership includes Business Development executive Ashleigh Schap, aimed to make the entity more decentralized. Schap, who is no longer with the organization, did not respond to a request for comment but sources told The Block she is considering suing Maker for $1 million. Maker's chief technology officer, Andy Milenius, has also left the organization alongside several other prominent core developers, according to sources.

A legal letter from an attorney representing five board members of the MakerDAO Ecoystem Growth Foundation (MEGF) suggests that the board members were pressured to resign by Christensen in late March. The board members were named as David Currin, Denis Erfurt, Thomas Pulber, James Reidy, and Kenny Rowe.

The Signal-based Purple Pillers, whose name derives from a cocktail of the Matrix's binary 'blue pill' and 'red pill', emerged to push back against Christensen, who in 2018 decided to take control of a ~$130 million development fund, sources say. Indeed, questions over where to allocate the funds, aimed at building out the ecosystem, sparked tension amongst Maker's 90+ employees and other community members. Originally, the fund was overseen by multiple parties, all of which had their own keys to collectively unlock funds for the organization to use. In 2018, Christensen called on the key holders to surrender their keys for him to better execute his vision for the company.

Sources also told The Block that Maker is trekking forward, and is in the process of purchasing a broker-dealer license and setting up a for-profit business, potentially an alternative-trading system. This move comes after the Maker Foundation shut down the previously popular Oasis. Dex and Maker Market exchanges, both of which listed MKR, a token some have suggested may qualify as an unregistered security. At present, the majority of MKR trading volume now comes from decentralized exchange, Uniswap, although spot volume remains relatively small to OTC activity.

Maker has been on a tear from late November, gaining 160% and surpassing $800 in early April. While the price has declined since then by 30% with Maker currently trading at approximately $560, that's still up 86% since November. One might recall that a16z crypto purchased 6% of the total MKR token supply for $15 million USD at a 25% implied discount in September. In September, a16z crypto owned 70,000 MKR out of which 10,000 had no lockup period, 20,000 MKR has a lockup of one year and 40,000 MKR has a lockup of 3 years.

About MakerDAO

MakerDAO is a non-custodial collateralized credit facility built on top of Ethereum, garnering interest across crypto communities. It was created as a way to bootstrap a decentralized stablecoin (called Dai), the system uses smart contracts to hold over-collateralized debt positions (CDPs) in order to back stablecoin issuance while targeting a 1:1 peg to the U.S. dollar. About 2.1 million ether ($350 million), or almost 2% of the total Ethereum supply, is currently locked in Maker DAO's smart contracts.

Throughout the last month, Maker DAO's stability fee has been increased three times from 3.5% to 14.5% and there is currently less than 88 million Dai outstanding.

The full legal letter can be viewed here:

This post has been updated to clarify that Maker is in the process of obtaining a broker dealer license. It does not presently have one. Further, the report was updated after publication to include information from a legal notice.

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