Understanding MakerDAO - Ethereum's "Craziest" DAPP in One Article

Why is MakerDAO the "craziest" DAPP on Ethereum?#

In an interview with Vitalik Buterin, the host asked him, “What’s the craziest application of the Ethereum that you’ve come across lately?” Vitalik Buterin's response was, “I am definitely impressed by MakerDAO.”

MakerDAO is the first DAO organization established on Ethereum (based on the establishment time rather than the product launch time; currently, The DAO is recognized as the first DAO on Ethereum based on product launch time). In the entire stablecoin market, DAI ranks No. 1 in terms of the scale of decentralized stablecoin applications, and in the DeFi field, MakerDAO has a disruptive role and significance. The over-collateralization mechanism of MakerDAO eliminates the risk of "printing money out of thin air" and is a fully on-chain system, with no risk of centralized custody.

This article is purely personal analysis and does not constitute any investment advice. If there are any inaccuracies, please feel free to point them out.

MakerDAO is a DeFi project running on Ethereum that integrates over-collateralized stablecoins, lending, storage, user governance, and development, and it is currently the DeFi project with the highest TVL on Ethereum.
The core of MakerDAO is the Maker Protocol, which allows users to collateralize crypto assets to mint a decentralized stablecoin DAI pegged to the US dollar. DAI maintains price stability through over-collateralization and adjustments to the DSR (DAI Savings Rate).
When the value of the DAI minted by users exceeds the collateral value allowed by the Maker Protocol, it will face liquidation auctions and incur a liquidation penalty. If the auction amount is sufficient to repay the debt, it enters a second-stage auction to ensure that the liquidated party can reclaim more collateral. If the debt exceeds the collateral, the Maker Protocol will bear the unpaid debt.
MakerDAO once experienced a "zero-dollar purchase" incident, but the vulnerability did not originate from the protocol itself but from issues with the liquidation mechanism parameters. MakerDAO has an emergency handling mechanism to ensure that the Maker Protocol can withstand systemic risks.
MKR is the governance token of the Maker Protocol and also serves as a source for capital restructuring. Holding MKR allows participation in MakerDAO governance. When the Maker Protocol is insolvent, funds can be raised through the over-issuance of MKR auctions to repay debts. When the funds in the Maker Protocol treasury reach a certain amount, DAI will also be auctioned to repurchase and destroy MKR.
The governance system of MakerDAO shows a trend towards centralization, with a high concentration of MKR leading to "oligarchic" governance, where the top 100 addresses control 83.41% of the total MKR supply.

Table of Contents#

MakerDAO - The King of DeFi
What is a Decentralized Stablecoin - DAI?
How to Generate DAI? How Does DAI Maintain Price Stability? How to Leverage DAI Using the Maker Protocol?
How Does the DAI Liquidation Mechanism Work?
Is the Maker Protocol Really Safe?
What is MKR? What Can MKR Be Used For?
Decentralized Governance or Oligarchic Governance of MakerDAO?

1. MakerDAO - The King of DeFi#

What is MakerDAO?

MakerDAO is a project running on the Ethereum blockchain that integrates over-collateralized stablecoins, lending, storage, user governance, and development. The core of MakerDAO is the Maker Protocol, also known as the Multi-Collateral DAI (MCD) system, which allows users to use protocol-approved assets as collateral to generate the decentralized stablecoin DAI. As of July 26, 2022, MakerDAO's TVL is $8.03B, firmly securing its position as the king of DeFi.

Data Source: DeFiLlama

How Was MakerDAO Established?

Rune Christensen was an active member of the BitShares community before Ethereum appeared in 2014 and explored launching the stablecoin DAI on the BitShares platform. However, Rune Christensen found that the Bitcoin network was insufficient to support a complex financial system and ultimately chose Ethereum, known as the "world computer." Unlike Bitcoin, which has a very limited scripting language, Ethereum is a general-purpose programmable blockchain that runs a virtual machine capable of executing any and infinitely complex code, enabling the implementation of smart contracts on Ethereum.

MakerDAO founder Rune Christensen first presented the vision of Maker to the world through Reddit in March 2013, aiming to create a US dollar-pegged stablecoin supported by Ethereum. MakerDAO was officially established in 2014, becoming the first decentralized autonomous organization (DAO) on Ethereum (based on establishment time). In March 2015, the prototype of the Maker Protocol was born, and founder Rune Christensen shared the design of the protocol, contract code, and testing front-end with Ethereum community members, including Vitalik Buterin, on Reddit. Between 2015 and 2017, he collaborated with developers from around the world on the first iteration of the code, architecture, and documentation. In mid-2016, MakerDAO launched the first decentralized trading platform on Ethereum: OasisDEX (now Oasis.app). In December 2017, MakerDAO officially launched the first version of the MakerDAO white paper on Ethereum, introducing the DAI stablecoin system. On July 20, 2021, founder Rune Christensen published a blog post titled "MakerDAO Has Come Full Circle," announcing that the Maker Foundation had completed its mission and would dissolve in the coming months, fully transferring governance to the community, achieving true decentralization.

2. What is a Decentralized Stablecoin - DAI?

DAI is a decentralized stablecoin pegged to the US dollar, generated through over-collateralization on MakerDAO via the Maker Protocol. The total supply depends on the value of the collateral on the Maker Protocol. As of July 26, 2022, a total of 7,320,165,935 DAI have been minted, ranking fourth in total market capitalization among all stablecoins, making it the largest decentralized stablecoin by market cap.

Data Source: coinmarketcap

What exactly is a decentralized stablecoin? What is the difference between centralized and decentralized stablecoins?

Decentralized Stablecoins

Decentralized stablecoins—typically divided into algorithmic stablecoins and over-collateralized stablecoins—can be understood as stablecoins minted through a series of algorithms and smart contracts designed by code rather than a centralized entity. Over-collateralized stablecoins do not generate value out of thin air, as they are usually minted by locking a certain amount of assets. To retrieve the locked assets, the corresponding over-collateralized stablecoins must be destroyed. In contrast, purely algorithmic stablecoins are minted through a pre-designed mechanism, which may have flaws in its design. The classic example is the LUNA collapse incident, where UST was pegged to LUNA (which created its own pegged asset).

Representatives of decentralized stablecoins include:

DAI: DAI is an over-collateralized stablecoin minted through the MakerDAO on Ethereum by collateralizing specified assets.

UST: UST is a purely algorithmic stablecoin minted on the Terra blockchain through a pegging mechanism, where burning $1 worth of LUNA mints 1 UST.

FRAX: FRAX is an algorithmic + over-collateralized stablecoin minted on Frax Finance by algorithmically collateralizing a certain ratio of specified assets and FXS (governance token).

AUSD: AUSD is an over-collateralized stablecoin minted on AlpacaFinance by collateralizing deposits on AlpacaFinance.

Centralized Stablecoins

Centralized stablecoins—cryptographic tokens with "pegging" attributes—aim to peg to a certain off-chain asset and maintain the same value as it. To maintain price stability, centralized stablecoins are collateralized by off-chain assets. For example, when issuing a USDT, Tether prepares a reserve of one dollar to ensure that the value of the stablecoin is linked to the quantity of supporting assets. Centralized issuers typically hire independent accounting firms or auditing agencies to regularly verify the supporting assets in custody accounts.

Representatives of centralized stablecoins include:

USDT: USDT, also known as Tether, is a stablecoin issued by the American company Tether to be equivalent to the US dollar, i.e., 1 USDT = 1 USD. Users can exchange USDT for USD at a 1:1 ratio at any time. Tether promises a 1:1 reserve, meaning that for every new USDT issued, $1 will be added to its bank reserve account, ensuring the safety of investors' funds (but the actual reserve account is not publicly disclosed).

USDC: USD Coin (USDC) is a fully collateralized stablecoin pegged to the US dollar, issued and managed by a joint venture of Circle and the exchange Coinbase, and its financial status is publicly reported monthly by the professional service firm Grant Thornton.

BUSD: Binance USD (BUSD) is a stablecoin approved by the New York State Department of Financial Services (NYDFS) and issued in partnership between Binance and Paxos, pegged to the US dollar at a 1:1 ratio. BUSD is the first stablecoin with its own independent client app, and every BUSD in circulation has a corresponding $1 asset stored in the bank, audited by an independent third-party accounting firm, with audit results disclosed regularly.

TUSD: TUSD is a stablecoin launched by TrustToken, pegged to the US dollar at a 1:1 ratio. TrustToken is a digital asset platform based in San Francisco, USA, and a cryptocurrency provider that simplifies cryptocurrency trading services and cryptocurrency hedge funds. Unlike Tether, which controversially insists on bank account audits, TrueUSD uses third-party trust companies and independent accounting firms to provide regular audits, offering strong legal protection for holders. TrustToken also plans to release stablecoins pegged to the Australian dollar, Euro, Canadian dollar, and Hong Kong dollar, namely TAUD, TEUR, TCAD, and THKD.

DAI belongs to the category of over-collateralized stablecoins among decentralized stablecoins. Essentially, the minting of DAI does not increase the total value of the crypto market, as the minting of DAI means that the collateral assets worth more than the minted DAI are locked in a smart contract and cannot circulate. In contrast, the minting of centralized stablecoins can increase the total value of the crypto market because the minted centralized stablecoins reflect real value—fiat currency.

3. How to Generate DAI? How Does DAI Maintain Price Stability? How to Leverage DAI Using the Maker Protocol?

Generation Mechanism

DAI is minted by users through over-collateralizing assets via the Maker Protocol, which users can implement through Oasis.app. The principle is that users create a vault on Oasis to lock up crypto assets as collateral, and then users decide how much DAI to generate. Users can only generate DAI worth less than the collateral value, and when redeeming the collateral assets, they must pay a stability fee. The Maker Protocol supports over 20 types of collateral, such as ETH and WBTC, with each asset's collateralization ratio and stability fee determined by the asset's risk index and governance by MKR holders. For example, if a user wants to collateralize mainstream assets like ETH, WBTC, or stETH to mint DAI, and they want to mint 1000 DAI, they need to collateralize $1700 worth of ETH, $1750 worth of WBTC, or $1850 worth of stETH to mint DAI, with stability fees of 0.5%, 0.75%, and 0.75%, respectively. The interest generated belongs to the Maker Protocol, not Oasis.app.

Data Source: Oasis.app

How Does DAI Achieve Price Stability?

Although DAI is designed to be pegged to the US dollar at a 1:1 ratio, it can still experience price discrepancies due to market behavior. The MakerDAO community uses the DAI Savings Rate (DSR) to allow all DAI users to automatically earn savings returns to balance market supply and demand. Users simply need to lock their DAI into the DSR contract of the Maker Protocol. The DSR contract does not set a minimum deposit requirement, allowing users to withdraw part or all of their DAI from the DSR contract at any time.

When the market price of DAI deviates from the target price due to market changes, MKR holders can vote to change the DSR to maintain price stability:

If the market price of DAI exceeds $1, MKR holders can choose to gradually lower the DSR to reduce demand, bringing the market price of DAI back to the target price of $1.
If the market price of DAI falls below $1, MKR holders can choose to gradually increase the DSR to stimulate demand, raising the market price of DAI back to the target price of $1.

DAI is not generated out of thin air, so who pays this interest?

The interest on DAI is paid from the revenue of the MakerDAO stability fee. If the stability fee revenue cannot cover the total expenditure of the DAI savings rate, the shortfall is recorded as bad debt, and MKR is over-issued to make up the difference, with MKR holders bearing the risk.

How to Use the Maker Protocol to Leverage?

After users create a vault, they can borrow DAI in the vault on Oasis.app using the Oasis Multiply feature, paying interest determined by MKR holders to purchase more collateral positions. This allows users to gain more returns as the value of the collateral assets rises, but it also exposes them to higher liquidation risks if asset values decline.

Data Source: Oasis.app

Users can also choose to put the minted DAI and USDC into Uniswap V3 for liquidity mining and borrow DAI on Oasis.app to achieve higher liquidity mining rewards.

Data Source: Oasis.app

4. How Does the DAI Liquidation Mechanism Work?

After users mint DAI, if they want to retrieve the assets locked in the vault, they need to return the DAI to reclaim the collateralized crypto assets from the vault. The returned DAI will be automatically destroyed by the protocol to achieve a balance between the value of the collateral assets and the value of DAI.

Liquidation Mechanism

When the value of the DAI generated by users remains less than the value range of the collateral allowed to generate DAI, everything operates normally. However, if the value of the collateral declines, causing the value of the DAI generated by users to exceed the value allowed by the collateral, for example, if the collateralization ratio for minting DAI with ETH is 2:1, and a user uses $4000 worth of ETH to mint 1000 DAI, the $4000 worth of ETH can allow for a maximum of 2000 DAI to be minted. If the price of Ethereum drops below $2000, the value of the 1000 minted DAI will exceed the maximum value of DAI allowed to be minted with Ethereum worth less than $2000, triggering the liquidation process. Liquidation means that the user no longer needs to return the DAI, and the user's generated vault will be confiscated for collateral auction to repay the DAI owed to the system. Additionally, the liquidated user must pay a liquidation penalty. MKR holders in the Maker community will set different liquidation penalties for different types of collateral, and the value of the collateral being auctioned will include the amount of the liquidation penalty.

The auction process consists of two stages: Collateral Auction and Reverse Collateral Auction:

Collateral Auction: In the first stage of the collateral auction, bidders start bidding on the auctioned collateral. The highest bidder pays DAI to acquire the collateral at a low price, and the repurchased DAI is used to repay the outstanding debts and liquidation penalties of the treasury.

Reverse Collateral Auction: If the DAI obtained from the first stage auction is sufficient to repay the treasury's debts and cover the liquidation penalties, the auction will enter the second stage, where bidders bid on fixed-price DAI to take away less collateral, allowing the original treasury owner to reclaim as much collateral as possible while ensuring all DAI debts are repaid.

The auction process is illustrated below:

When the first stage auction is sufficient to repay debts, the second stage is initiated.

When the first stage auction is insufficient to repay debts, the second stage is not initiated, and the unpaid debts are covered by the Maker Buffer.

Here, there is a concept called the Maker Buffer. So what is the Maker Buffer?

Maker Buffer is part of the Maker Protocol, a treasury that does not belong to anyone. The stability fees generated when users use the protocol and the revenues from auctions (such as liquidation penalties) flow into the Maker Buffer. The debts generated by the Maker Protocol (such as auction insolvency) are borne by the Maker Buffer. If there is not enough DAI in the Maker Buffer to repay the Maker Protocol's debts, the Maker Protocol will trigger the Debt Auction mechanism.

Debt Auction Mechanism: When the DAI in the Maker Buffer is insufficient to repay Maker's debts, the Maker Protocol will over-issue MKR to initiate the auction process. Bidders can use DAI to auction for MKR, and the DAI obtained from the auction will enter the Maker Buffer to repay debts.

But doesn't this mean MKR will be severely over-issued and become increasingly worthless?

The Maker Protocol actually has another auction mechanism to ensure that MKR is not severely over-issued, which is the Surplus Auction mechanism.

Surplus Auction Mechanism: When the DAI in the Maker Buffer accumulates to a certain amount (a value determined by Maker governance), the excess DAI will be auctioned off in a Surplus Auction. During the Surplus Auction, bidders can use MKR to auction for a fixed amount of DAI, with the highest bidder winning. Once the Surplus Auction ends, all MKR obtained from the auction will be automatically destroyed by the protocol, thereby reducing the total supply of MKR.

Now, you might have a question: How does the Maker Protocol know that my assets are facing liquidation?

The world of blockchain is not interconnected with the real world, so a bridge is needed to connect the two worlds. How does the Maker Protocol obtain the prices of these crypto assets in the real world? This requires something called a Price Oracle.

A so-called oracle is not a machine used to predict the future, but a tool used in the blockchain world to obtain off-chain information, as smart contracts cannot actively fetch off-chain data and can only accept data passively.

Price Oracle is a group of trusted price nodes selected by MKR voters to provide price information to the Maker system. The number of nodes in the group is also controlled by MKR voters. To prevent attackers from controlling most of the price oracles, the Maker Protocol obtains price information through the Oracle Security Module (OSM) rather than directly through the price oracles. The Oracle Security Module is a defense layer set up between the price oracle nodes and the Maker Protocol, delaying price updates by 1 hour. During this period, if any price oracle is found to be controlled by an attacker, it can be frozen through emergency information inputters or Maker governance voting. The decision-making power regarding emergency information inputters and the delay in price input lies with MKR holders.

After DAI is minted, the collateral will be locked in the vault, and the Price Oracle will check whether the value of the collateral reaches the maximum collateralization value of DAI. When the value of the collateral exceeds the maximum collateralization value of DAI, it will trigger liquidation auctions, and the liquidated party will incur penalties while bidders acquire the collateral at a low price. If the auction is insufficient to cover the debts, the protocol will bear the debt.

5. Is the Maker Protocol Really Safe?

In the online world, there is no absolutely safe protocol or system, and this is also true for a complex design that carries such a large amount of funds in a DeFi protocol; some vulnerabilities are inevitable.

MakerDAO "Zero-Dollar Purchase"?

During the "Black Swan" event on March 12, due to a sharp drop in ETH prices, the value of a large amount of collateral in the Maker Protocol fell below the liquidation threshold, triggering the auction process. However, due to a surge in on-chain transaction volume within a short period, gas fees skyrocketed, and the liquidation requests from liquidation bots could not be processed in time due to low gas fee settings. As a result, a certain liquidator won the auction with a bid of 0 DAI without any other auction competitors, leading to MakerDAO's liquidation mechanism failure, resulting in ETH collateral worth $8.32 million being auctioned off at zero price, and the Maker Protocol system incurred $5.67 million in unsecured bad debt, draining the DAI from the Maker Buffer. To fill the $5.67 million in unsecured bad debt, MakerDAO initiated its first MKR auction to fill the gap and subsequently improved the protocol mechanism to prevent similar incidents from happening again:

Increased the maximum auction quantity from 50 ETH to 500 ETH to reduce the number of auctions and concentrate bidders, allowing bidders to participate in one auction instead of ten to bid for 500 ETH.
Changed the time from the last bid to the end of the auction from ten minutes to six hours to prevent other bidders from being unable to participate during on-chain congestion.

From this incident, it can be seen that MakerDAO's losses did not stem from vulnerabilities in the protocol itself but rather from flaws in the auction mechanism design.

What is MakerDAO's "Nuclear Button" - Emergency Shutdown Mechanism?

For Maker, which carries the largest amount of funds in DeFi, it is particularly important to be prepared for emergency measures to deal with various extreme situations. In the event of extreme situations such as malicious governance actions, illegal intrusions, security vulnerabilities, and prolonged market irrationality, the Emergency Shutdown mechanism serves as the last line of defense for MakerDAO. When the Emergency Shutdown mechanism is activated, the normal functions of the Maker Protocol will cease, and users will no longer be able to deposit collateral and generate DAI from the Maker Protocol. The settlement system will ensure that any DAI holders can redeem the corresponding value of collateral from the system, and to ensure smooth liquidation, MKR holders will decide on a waiting period before collateral can be redeemed. Once the emergency shutdown is initiated, the prices of all collateral types' price oracles in the system will be immediately frozen, and it will be calculated whether the collateral is sufficient to cover the unpaid DAI.

There are two methods to initiate the Emergency Shutdown mechanism:

The Emergency Oracle is an emergency oracle selected by MKR holders through voting, capable of freezing individual price oracles (e.g., ETH and BTC price oracles) and has the unilateral authority to trigger the Emergency Shutdown mechanism. When extreme situations occur, MKR holders can authorize the Emergency Oracle to initiate the Emergency Shutdown mechanism.

The Emergency Shutdown Module (ESM) is a decentralized emergency initiation process that requires MKR holders to lock MKR in the module to initiate. The emergency shutdown will only be triggered when the locked MKR reaches a specified value, which is determined by MKR holders, initially proposed to be 50,000 MKR.

After the Emergency Shutdown mechanism is initiated, it will go through three stages:

Stage One: Closure of the Maker Protocol

Once the shutdown mechanism is activated, users cannot create new vaults to mint DAI or operate existing vaults. The price oracle mechanism will also be frozen, and asset prices will stop updating. Freezing the price oracle mechanism ensures that all users can retrieve their net asset value, and vault owners can immediately reclaim collateral exceeding the required collateral for their debts.

Stage Two: Initiation of the Auction Mechanism After Emergency Shutdown

Once the shutdown mechanism is activated, collateral auctions will commence, which will be completed within a specified time frame, longer than the original auction time limit. The auction time is determined by MKR holders to ensure that all auctions can be successfully completed after the auction ends.

Stage Three: DAI Holders Redeem Remaining Collateral

After the auction ends, DAI holders can redeem collateral at a fixed exchange rate using DAI, and MKR holders will begin to decide on restarting the system.

Currently, it appears that MakerDAO has experienced a black swan event and learned lessons to improve the auction mechanism. The existence of the Emergency Shutdown mechanism gives MakerDAO the ability to withstand systemic risks in extreme situations, making it relatively safe overall.

6. What is MKR? What Can MKR Be Used For?

MKR is the governance token of the Maker Protocol and serves as a source for capital restructuring. At the beginning of the Maker Protocol, there was a total of 1,000,000 MKR, and the total supply of MKR fluctuates with the operation of the protocol system.

As a governance token, MKR holders can use MKR to vote on governance matters concerning MakerDAO. Voting typically involves modifying internal parameters of the Maker Protocol, such as the collateral value and DAI generation/liquidation ratio, liquidation penalty ratio, DSR savings rate, auction mechanism parameters (bid amounts, bidding duration, bidding intervals, etc.), which crypto assets can be used as collateral, and the selection of oracle nodes.

As a source for capital restructuring in the Maker Protocol, when a debt deficit occurs in the Maker Buffer, the system will over-issue MKR to raise funds for debt repayment. When the funds in the Maker Buffer exceed a certain amount (determined by MKR holders), DAI will be auctioned to repurchase MKR and destroy it.

7. Decentralized Governance or Oligarchic Governance of MakerDAO?

As of July 26, 2022, the total supply of MKR is 977,631.04, with a total of 86,785 addresses holding MKR.

Data Source: etherscan

From the MKR token distribution chart, an interesting phenomenon can be observed: although there are a total of 86,785 addresses holding MKR, the top 100 addresses collectively control 83.41% of MKR. This phenomenon of wealth centralization is not uncommon, even in the real world, where a few individuals hold a large amount of wealth. According to a 2018 BBC News report: 'World's richest 1% get 82% of the wealth'.

Information Source: BBC News

What Risks Does the High Concentration of MKR Pose to MakerDAO?

The high concentration of MKR can lead to oligarchic governance in MakerDAO, where a small number of individuals can control the governance of MakerDAO.

First, let’s understand the governance proposal process of MakerDAO.

The Maker governance process is roughly divided into two stages: Proposal Voting and Execution Voting.

(1) The purpose of proposal voting is to ensure that governance decisions are carefully considered and consensus is reached before entering the voting process. A general consensus will be formed within the community before moving to the execution voting stage.

(2) The purpose of execution voting is for MKR holders to collectively decide to approve or reject changes to internal parameters within the system, such as voting to determine the stability fee rate for collateral.

From a technical perspective, changes to the internal parameters of the Maker Protocol are implemented through proposal contracts. Each contract is designed for one or more governance actions, and all voting is managed by the contract. Once the execution vote is approved, the proposal contract will begin executing changes to the internal parameters of the Maker Protocol. Since the proposal contract is one-time use, it cannot be reused once executed, and a new smart contract must be created for the next proposal.

Changes to governance variables of the Maker Protocol do not necessarily take effect immediately after being approved by execution voting. If voters choose to activate the Governance Security Module (GSM), these changes will be delayed (the time is determined collectively by MKR holders). This delay gives MKR holders the opportunity to take action; if necessary, they can trigger the Emergency Shutdown mechanism to oppose malicious governance proposals (e.g., proposals that modify collateral parameters contrary to current monetary policy or proposals to disable security mechanisms).

In simple terms, the governance process of MakerDAO involves forming a certain consensus within the community before initiating execution voting and creating a proposal contract. Voters can choose to activate the Governance Security Module (GSM) to delay the activation of changes after voting approval, allowing more MKR holders to engage in further discussions or actions, such as raising objections to the voting results or initiating the Emergency Shutdown mechanism.

After understanding the governance process of MakerDAO, we can observe the actual situation of MakerDAO governance. As of July 26, 2022, the latest MakerDAO governance proposal is as follows:

From this proposal, we can observe some interesting phenomena: the number of individuals who truly participate in governance voting and can have an impact does not exceed 20, and the total voting share of the top four individuals already exceeds 50%, allowing them to decide the proposal's passage and modify the internal parameters of the Maker Protocol. In some votes, a single individual can even play a decisive role.

To some extent, MakerDAO can be said to belong to the so-called "oligarchic" governance rather than true decentralized governance. This situation is not uncommon, and the reasons for it can be attributed to people's general lack of interest in participating in governance or the price of MKR making the threshold for participating in MakerDAO governance too high. Although for holders of a large amount of MKR, collaborating with other MKR "whales" can achieve "complete control" over the Maker Protocol, even the top MKR holders have enough MKR to unilaterally initiate the Emergency Shutdown mechanism, using it for malicious purposes would not benefit the MKR holders themselves. The development of MakerDAO is the common interest of MKR holders.