Maker's regulatory resistance strategy discussed through the Oasis event.

Original author: Crypto KOL@Ignas | DeFi Research

Translated by: Kxp, BlockBeats

After a "counter-exploit" incident worth $225 million, MakerDAO is facing fierce criticism. Perhaps they cannot refuse the order issued by the High Court of England and Wales this time, but they have designed a strategy to prevent such incidents from happening in the future.

This counterattack launched by Jump Crypto to recover stolen assets sets a bad precedent, even though it makes sense. Next time, the government could force the confiscation or blocking of assets for whistleblowers like Edward Snowden or any other "dangerous individuals" in their eyes.

Obviously, this approach violates the principles of decentralization and Bitcoin. In fact, it also goes against Maker's mission to create an unbiased world currency with DAI, which aims to make DAI as close to Bitcoin as possible. However, Maker has not yet achieved this goal, so I think they should be even less willing than us to see this situation.

It is worth mentioning that MakerDAO does not have control over any frontend vendor, such as Oasis, that appears on the Maker homepage. Nevertheless, DAI is still susceptible to regulatory scrutiny due to its association with real-world assets.

MakerDAO is very unhappy with this vulnerability, so much so that they are willing to de-anchor from the US dollar to ensure that DAI has anti-censorship capabilities. We can take a look at Rune's thoughts in "The Endgame Plan", which assumes that regulatory crackdowns will eventually occur and that they will happen faster than expected.

The cryptocurrency industry is facing increasing pressure from regulatory agencies, such as Paxos BUSD, which was forced to shut down even though it complied with regulatory requirements. This poses a threat to all DeFi stablecoins, which should prepare themselves for possible restrictive regulatory environments. Each company or organization needs to develop its own strategy to address this challenge.

Maker has developed a three-stage strategy to address regulatory challenges, with the first stage known as the "Pigeon Stance". It assumes that current regulatory threats are at a low level and that the global economic situation is stable. The goal of this stance is to generate as much revenue as possible from RWA and prepare for potential regulatory changes in the future.

It is not a commendable position: its inspiration comes from the evolutionary advantage of pigeons - because they are not too afraid of humans, they can easily scavenge for leftover food in the city. Makers expect that this position can last for about two and a half years, but the transition to the next stage may be advanced due to any regulatory crackdown that may occur during this period.

Currently, Maker cannot refuse court rulings because they largely rely on easily seizable real-world assets as collateral. In order to further enhance resistance to censorship and challenge court rulings, Maker must continue to advance progress in the remaining two stages.

The "Eagle stance" in Maker is named after a quote from Roosevelt: "Speak softly and carry a big stick." This stance includes limiting Maker's risk with collateralized real-world assets to 25% and decoupling DAI from the US dollar. While this will help achieve decentralization, it also means that the value of DAI will fluctuate.

Phoenix Stance is the strongest and most powerful strategy adopted by Maker to achieve maximum adaptability and survival capability. This strategy is triggered when there are clear signs that RWA collateral is about to be attacked, or when there is widespread economic and geopolitical instability around the world.

Rune wrote that DeFi has missed the opportunity to prove to the public that it is not subject to regulatory scrutiny like traditional banks and can become a public and neutral financial facility. This is mainly due to the damage caused to DeFi's reputation by the collapse of Terra/FTX, and people believe that the ecosystem lacks real value.

According to this information, I sensed the concern of Rune (and Maker DAO itself) about the impact of the court ruling. However, this further proves the importance of Maker's endgame plan, which is to establish DAI as the most flexible stablecoin in DeFi. Otherwise, all of this would be meaningless.

Maker is more actively building its own DeFi ecosystem than ever before, and empowering DAI with more power without relying on external partners.

If you want to learn about their specific approach, you can read my tweet.

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