Case Study 2: MakerDAO's Endgame — The Most Ambitious DAO Restructuring Ever Attempted

Background

In the spring of 2022, Rune Christensen — the co-founder and most influential figure in MakerDAO — published a series of forum posts that would shake the governance of the most important DAO in decentralized finance. He called it "The Endgame Plan."

The proposal was staggering in scope: restructure MakerDAO from a single monolithic DAO into a constellation of semi-autonomous SubDAOs, each with its own governance token, its own treasury, and its own area of responsibility. Rename the protocol from "Maker" to "Sky." Rename the DAI stablecoin to "USDS." Rename the MKR governance token to "SKY." Overhaul the governance process, the tokenomics, the collateral framework, and the long-term strategic direction of a protocol managing billions of dollars.

MakerDAO's Endgame is the most ambitious governance restructuring any DAO has ever attempted. It reveals everything important about decentralized governance at scale: the tension between vision and consensus, the problem of founder influence in "decentralized" systems, the difficulty of coordinating complex changes through token voting, and the question of whether a DAO can fundamentally reinvent itself without destroying what made it valuable.

MakerDAO: Context and Stakes

To understand the Endgame, you need to understand what MakerDAO governs and why it matters.

MakerDAO is the governance layer of the Maker Protocol, which issues DAI — a decentralized stablecoin pegged to the US dollar. Users deposit collateral (ETH, WBTC, real-world assets, and dozens of other token types) into "vaults" and borrow DAI against that collateral. The protocol earns revenue from stability fees (interest on borrowed DAI) and liquidation penalties (when undercollateralized vaults are liquidated).

As of late 2025, the Maker Protocol manages: - Over $5 billion in DAI supply - Billions in collateral assets, including over $2 billion in US Treasury bonds - Annual revenue exceeding $200 million - One of the most critical pieces of infrastructure in DeFi

MKR token holders govern this protocol. They vote on stability fees, collateral types, risk parameters, protocol upgrades, and treasury allocations. MakerDAO has been operating continuously since 2017, making it one of the oldest and most battle-tested DAOs in existence.

But by 2022, Rune Christensen had identified what he believed were existential problems.

The Problems Endgame Sought to Solve

1. Governance Scalability

MakerDAO's governance had become unwieldy. Every significant decision — from adding a new collateral type to adjusting a stability fee — required a full governance vote by MKR holders. With dozens of collateral types, each with multiple risk parameters, the governance bandwidth was overwhelmed. Delegates spent dozens of hours per week reviewing proposals. Most MKR holders did not vote at all. The core units (teams funded by the DAO) operated with varying degrees of accountability.

Christensen's diagnosis: MakerDAO had outgrown single-DAO governance. The protocol was too complex for one governance token to manage effectively.

2. Regulatory Risk

The inclusion of real-world assets (RWA) as collateral — particularly US Treasury bonds held through intermediaries — created a direct connection between MakerDAO and the traditional financial system. If regulators decided to target MakerDAO, these RWA positions could be frozen, potentially destabilizing DAI.

Christensen's diagnosis: MakerDAO needed to reduce its dependence on RWA while maintaining the revenue they generated, creating a strategic contradiction.

3. Centralization Creep

Despite being a "decentralized" organization, MakerDAO's day-to-day operations were increasingly centralized. Core units (the equivalent of departments) were funded by the DAO but operated with significant autonomy. Some community members argued that these units had become unaccountable fiefdoms, while others argued they were essential for the protocol's operation.

Christensen's diagnosis: the core unit model had failed. A new organizational structure was needed.

4. Competitive Pressure

New stablecoin protocols (Liquity, Ethena, and others) were challenging DAI's market position. USDC and USDT continued to dominate the stablecoin market. MakerDAO needed to innovate faster while maintaining the stability and trust that defined its brand.

The Endgame Plan

The Endgame Plan proposed a radical restructuring:

SubDAOs

Instead of one monolithic DAO, MakerDAO would spawn multiple SubDAOs, each focused on a specific function:

  • SubDAO for RWA management — handling real-world asset collateral
  • SubDAO for DeFi operations — managing crypto-native collateral and integrations
  • SubDAO for growth/marketing — user acquisition and brand management
  • SubDAO for protocol engineering — smart contract development

Each SubDAO would have its own governance token (distributed to MKR/SKY holders), its own treasury, and its own governance process. SubDAOs could make decisions within their domain without requiring a full MakerDAO governance vote. The parent DAO (MakerDAO/Sky) would retain control over fundamental parameters and the relationship between SubDAOs.

The theory was that this would solve governance scalability: instead of every MKR holder voting on every decision, specialized SubDAOs would handle routine decisions in their domain, with the parent DAO providing oversight and strategic direction.

The Rebrand: Maker to Sky

Christensen proposed rebranding the entire protocol: - MakerDAO becomes Sky - DAI becomes USDS (US Dollar Stablecoin) - MKR becomes SKY

The stated rationale was to create a "clean" brand for mainstream adoption, separating the protocol's future from its complex history. Critics saw it as an attempt to distance the protocol from its decentralized roots, or as a vanity project.

The Governance Framework

Endgame introduced "Alignment Artifacts" — a set of documents, including a constitution, scope frameworks, and a governance atlas — that would define the rules of governance in exhaustive detail. These documents, some running to hundreds of pages, were intended to create a comprehensive governance framework that could operate with minimal ongoing intervention.

Critics called it bureaucratic overreach. Supporters called it necessary formalization.

The Implementation Timeline

The Endgame was designed to unfold over multiple phases spanning several years:

  • Phase 1 (Pregame): Establish the governance framework, wind down core units, begin SubDAO launch
  • Phase 2 (Early Endgame): Launch SubDAOs, implement the rebrand, begin governance migration
  • Phase 3 (Mid Endgame): SubDAOs operational, new tokenomics in effect
  • Phase 4 (Final Endgame): Full decentralization of the governance framework

As of early 2026, the project has progressed through Phase 1 and into Phase 2, with the Sky rebrand partially implemented and the first SubDAOs in various stages of launch.

The Governance Battle

The Endgame Plan was not adopted by consensus. It was a governance battle — one of the most contentious in DAO history.

The Supporters

Christensen's proposal had the support of a significant faction of MKR holders, including several large delegates. The argument was pragmatic: MakerDAO's current governance was not scaling, the protocol faced real competitive and regulatory threats, and incremental improvements were insufficient. A bold structural overhaul was necessary, even if the process was messy.

Supporters also pointed out that Christensen's track record — he had co-founded the protocol and guided it through multiple crises, including the March 2020 "Black Thursday" market crash — earned him credibility to propose radical changes.

The Opposition

The opposition was vocal and organized. Their arguments included:

Concentration of Power: Critics argued that the Endgame Plan concentrated power in Christensen personally. The governance framework, the SubDAO structure, and the strategic direction were all shaped by his vision. For a protocol built on decentralization, having one person define the organizational architecture felt contradictory.

Complexity: The Endgame's governance documents ran to hundreds of pages. Critics argued that this complexity was itself a governance failure — if the governance framework is so complex that ordinary MKR holders cannot understand it, only insiders can meaningfully participate.

The Rebrand: The DAI and MKR brands had years of trust and recognition. Renaming them was seen by many as unnecessary and destructive. "DAI" was one of the most recognized names in DeFi. "USDS" sounded generic and corporate.

Process Concerns: Several governance delegates and community members argued that the process was rushed, that dissenting voices were marginalized, and that the votes were structured to favor passage. The sheer complexity of the Endgame meant that voting "yes" or "no" on the overall plan was insufficiently granular — many people supported some elements while opposing others, but the governance votes were bundled.

The Delegate Drama

Several prominent delegates — individuals and organizations that had been central to MakerDAO governance for years — publicly opposed the Endgame and ultimately left the ecosystem. Their departures were accompanied by detailed public statements explaining their objections, creating a public record of dissent that is unusual in DAO governance.

The departures reduced governance expertise and institutional knowledge, even as the protocol was undertaking its most complex structural change. This created a paradox: the governance restructuring made governance harder at exactly the moment it needed to be easier.

The Vote

Despite the opposition, the Endgame Plan passed through a series of governance votes in 2022-2023. Christensen's influence — both through his own MKR holdings and through his relationships with major delegates — was sufficient to carry the votes. The margins were not always comfortable, and participation was lower than many hoped for a decision of this magnitude.

What the Endgame Reveals

1. Founder Influence in "Decentralized" Systems

Rune Christensen is not the CEO of MakerDAO. He does not have unilateral control over the protocol. He cannot change smart contracts without governance approval. But his influence — through token holdings, relationships, institutional knowledge, and sheer force of vision — is sufficient to drive transformative changes through the governance process.

This raises a question that applies to virtually every DAO: how decentralized is governance when one person's vision can reshape the entire organization? Christensen followed the governance process. He submitted proposals. They were voted on. They passed. But the outcome was shaped by his agenda in a way that is difficult to distinguish from centralized decision-making through democratic theater.

2. The Scale Problem

MakerDAO's governance challenges are not unique — they are the predictable consequence of growth. When a DAO manages $5 billion in assets, has dozens of collateral types, earns hundreds of millions in annual revenue, and faces regulatory scrutiny in multiple jurisdictions, the governance bandwidth required is enormous. Volunteer delegates cannot provide this bandwidth indefinitely. Professional governance is necessary, but it creates its own centralization pressures.

The SubDAO model is an attempt to address this — decentralize within decentralization, create specialized governance domains that can operate semi-autonomously. Whether this works in practice or merely creates a more complex version of the same problem remains to be seen.

3. The Rebrand as Governance Test

The Maker-to-Sky rebrand was, in a sense, a test of governance legitimacy. A rebrand is not a technical necessity — the protocol works identically under any name. It is a strategic and symbolic decision. The fact that governance could pass a rebrand over significant community opposition demonstrates that DAO governance can make unpopular decisions. Whether it should is a different question.

The rebrand also revealed the limits of token-weighted voting for decisions that are not primarily economic. A stability fee adjustment directly affects token holders' economic interests, and token-weighted voting aligns decision-making power with economic stake. A rebrand is a community identity question, where the interests of small holders, ecosystem developers, and community members may be more relevant than the interests of large token holders.

4. Exit as Governance

Throughout the Endgame debate, MKR holders who disagreed with the direction could sell their tokens. Some did. In traditional governance theory, this is called "exit" (as opposed to "voice" — participating in the decision). In DAO governance, exit is frictionless: selling tokens on a DEX takes seconds and costs a few dollars in gas.

This means that DAO governance has a built-in safety valve that traditional governance does not: if you disagree with the direction, you can leave instantly and completely. But it also means that the remaining governance participants are a self-selected group — the people who stayed are, by definition, those who either agreed with the direction or did not care enough to leave. This can create the illusion of consensus from what is actually attrition.

5. The Documentation Paradox

The Endgame's extensive governance documentation (constitution, atlas, scope frameworks) was intended to create clarity and reduce the need for ongoing governance intervention. In practice, the documentation itself became a governance issue: who writes it, who interprets it, who enforces it? The documents were so complex that understanding them required specialized expertise, which further concentrated power in those who had that expertise — primarily Christensen and his allies.

This is a general problem with governance formalization: rules reduce ambiguity but increase complexity, and complexity favors insiders.

Current Status (as of early 2026)

The Endgame implementation continues, though the timeline has slipped from original projections:

  • The Sky rebrand has been partially implemented, with USDS and SKY tokens available alongside DAI and MKR
  • Several SubDAOs have been announced and are in various stages of formation
  • The governance framework documents have been published and are being iterated
  • Community sentiment remains divided, with ongoing debate about the pace and direction of changes
  • The protocol continues to operate and generate revenue throughout the transition

Whether the Endgame ultimately succeeds or fails as an organizational experiment may not be clear for years. Its scale, ambition, and contentiousness ensure that it will be studied by anyone seeking to understand governance at the frontier of decentralized organizations.

Analysis Questions

  1. The Founder Problem: Is it possible for a DAO to be truly decentralized when its co-founder holds significant tokens and institutional influence? What mechanisms could genuinely constrain founder power without destroying the founder's ability to contribute?

  2. Complexity vs. Accessibility: The Endgame's governance documents run to hundreds of pages. Is this level of formalization necessary for governing a $5B+ protocol, or does it create barriers that undermine the democratic promise of DAO governance? How do you balance thoroughness with accessibility?

  3. Exit vs. Voice: Many MKR holders who opposed the Endgame sold their tokens rather than continuing to fight the governance battle. Is "exit" a legitimate form of governance participation, or does it undermine governance by removing dissenting voices?

  4. The Rebrand Question: Was the Maker-to-Sky rebrand a legitimate governance decision or a case of a powerful individual imposing a vision on a community? What criteria should determine whether a DAO can make identity-level decisions through token voting?

  5. SubDAO Architecture: The SubDAO model attempts to solve governance scalability through decentralization within decentralization. What are the risks of this approach? How do you prevent SubDAOs from becoming either (a) puppet entities controlled by the parent DAO or (b) rogue entities that act against the parent DAO's interests?

  6. Measuring Success: How should we judge whether the Endgame was the right decision? What metrics would indicate success (governance participation rates, protocol revenue, DAI/USDS supply, delegate satisfaction, developer activity)? At what time horizon should we evaluate?

Key Lessons

  • Scale breaks governance. MakerDAO's governance challenges are not design failures — they are the inevitable consequence of a DAO growing to manage billions in assets. Any DAO approaching similar scale will face similar problems.
  • Founder influence persists. Even in a formally decentralized governance structure, founders retain outsized influence through token holdings, institutional knowledge, relationships, and moral authority. "Decentralized" governance with dominant founders is a different thing from genuinely distributed governance.
  • Complexity is a power structure. Complex governance frameworks favor those with the time, expertise, and resources to navigate them. This is not unique to DAOs — it is true of legal systems, tax codes, and corporate bylaws — but it is worth recognizing explicitly.
  • Rebrands are governance stress tests. Non-economic governance decisions reveal the limits of token-weighted voting because the mapping from "economic stake" to "legitimate interest" breaks down.
  • DAOs can survive internal conflict. Despite the contentiousness of the Endgame debate, MakerDAO has continued to operate, generate revenue, and maintain DAI's peg. The governance process was messy and divisive, but the protocol itself was resilient. This may be the most important lesson: DAOs do not need consensus to function — they need processes that are legitimate enough that participants accept outcomes they disagree with.