The Governance Cost of Managing Dual Collateral Pools

Dual pools require two independent, high-frequency price feeds. Governance must continuously audit and fund redundant oracles like Chainlink and Pyth, creating a ~$1M+/year recurring cost and a critical attack vector.

• Attack Surface Doubled: Each feed is a potential manipulation target.
• Governance Latency: Emergency parameter updates lag behind market crashes.
• Vendor Lock-In: Switching oracles requires a full governance cycle.

Capital is split between native and wrapped assets, diluting capital efficiency and yield. This forces governance to subsidize liquidity via inflationary emissions, creating a permanent drag on protocol treasury.

• Higher Slippage: Thin pools increase user cost, reducing competitiveness vs. Uniswap.
• Emission Wars: Governance is trapped in a cycle of competing with Curve and Balancer.
• TVL Volatility: Dual-pool depegs can trigger cascading liquidations.

Upgrading a dual-collateral system (e.g., adding a new asset type) requires synchronized governance across multiple chains. This creates coordination failure risk akin to a hard fork, stalling innovation for months.

• Cross-Chain Governance: MakerDAO's struggle with Spark Protocol on Gnosis Chain is a precedent.
• Technical Debt: Legacy pool logic becomes "too big to refactor."
• Innovation Tax: Competitors like Aave with simpler models can iterate faster.

Each collateral type (e.g., ETH-A, WBTC-B) required bespoke governance votes for debt ceilings, stability fees, and liquidation ratios. This created exponential overhead as the number of vault types grew.

• ~200+ governance polls per year at peak.
• 7-day voting delays for parameter tweaks, creating market risk.
• Specialized keeper teams required for each asset class.

MakerDAO is offloading collateral management to specialized, autonomous SubDAOs like Spark Protocol (ETH) and partners using Morpho Blue (RWA). This delegates granular risk decisions.

• Spark's D3M automates DAI minting against curated collateral.
• Morpho Blue's permissionless markets let experts (like BlockTower) set their own terms.
• Maker Governance now sets high-level capital allocation, not micro-parameters.

Delegating to SubDAOs and real-world asset (RWA) facilitators like BlockTower and Monetalis shifts credit risk concentration. Maker becomes a wholesale lender to a few large, trusted entities.

• ~60% of DAI backed by RWA vaults from a handful of partners.
• Counterparty risk replaces smart contract risk as the primary concern.
• Endgame Plan aims to balance this with Aligned Delegates and MetaDAOs.

The core tension is between slow, secure governance and fast, efficient markets. Legacy Maker had high latency. New architecture optimizes for speed but introduces new trust assumptions.

• Legacy: High safety, ~$1B capital efficiency per governance action.
• SubDAO Model: Lower safety, ~$10B+ capital efficiency per governance action.
• This is the fundamental governance debt payoff: trading perfect decentralization for scalable growth.

Splitting capital between native and bridged assets creates suboptimal capital efficiency and exposes governance to constant rebalancing votes.\n- TVL is misleading: A pool with $1B TVL split 50/50 behaves like two $250M pools due to fragmented liquidity depth.\n- Governance overhead: Every major market move triggers community proposals to adjust ratios, creating decision fatigue.

Two collateral types mean two independent risk models and oracle dependencies, doubling the governance surface for critical parameter updates.\n- Oracle risk: Requires governance to manage and vote on two separate oracle security committees (e.g., Chainlink for ETH, Wormhole for USDC).\n- Parameter hell: Safe debt ceilings, liquidation ratios, and stability fees must be set and maintained for each asset, a common failure point in protocols like MakerDAO.

The endgame is canonical, natively minted assets. Builders should prioritize integrations that make bridged assets behave like native ones to collapse governance scope.\n- Adopt OFT Standard: LayerZero's Omnichain Fungible Token standard moves governance from managing bridges to managing a single token contract.\n- Follow the leader: Protocols like Stargate Finance demonstrate the capital efficiency of a unified liquidity layer, reducing governance to a single asset class.

Maker's evolution from single-collateral DAI (SAI) to Multi-Collateral DAI (MCD) and now to Endgame showcases the existential governance cost of complexity.\n- Historical burden: MCD's introduction of dozens of collateral assets (RWA, bridged) led to continuous executive votes and political strife.\n- The pivot: The Endgame plan's focus on MetaDAOs is an explicit admission that monolithic governance of complex collateral baskets is unsustainable.