Unless you’ve been studying the blockchain space closely over the past few years, you likely haven’t heard of MakerDAO. There was no ICO, you can’t trade the MKR token on popular exchanges and there has been no hype around it. There is, however, an exciting grassroots community and useful product emerging and there are many lessons that entrepreneurs and investors in the space can learn from the project:

Who your early token holders are matters a lot

In the mad rush to raise funds via an ICO in the past year, most projects completely ignored the importance of who the token holders are in the early days. Especially in the case of governance tokens that give token holders the right to vote on critical changes to a network on chain, as a founding team you want your token holders to be well-informed contributors rather than speculators looking to make a quick profit without contributing. Even if your token is not a governance token, sophisticated contributors are generally better community members than pure speculators; leading a community of speculators can be distracting at best and devastating at worst.

M akerDAO never did an ICO and does not market the MKR token to unsophisticated speculators because MKR holders play a critical role in maintaining the network: they vote on the design decisions that ultimately determine the success of the network (like which assets can be used as collateral in the CDP system)

If MKR tokens were controlled by unsophisticated speculators who don’t understand this system, it could be devastating for the system. Rune Christensen, Andy Milenius and the entire MakerDAO team recognized this early on and have always emphasized the importance of getting the token in the hands of well-informed contributors. That is a big reason why there was no ICO and it’s still not easy to buy MKR (you can only use a limited number of decentralized exchanges) and also why MKR is not getting promoted by any of the speculators or exchanges that have gotten involved in the ecosystem in the past year. MKR is accessible to anyone in the world, though the access isn’t easy and you do need to take the time to do your homework to get involved.

Token-based projects work best as distributed internet tribes rather than traditional companies

Most ICOs have simply been the old world slapping on a shiny new technology: traditional companies opportunistically taking advantage of the demand for cryptographic tokens via permissionless crowdfunding. The most impactful projects will think deeply about how to use the token mechanism not to raise funds in a centralized manner but rather to create fundamentally new organizational structures that bring people together to achieve a common goal in new ways. MakerDAO is one of the best examples of that we’ve seen to date.

There is currently a small distributed team behind MakerDAO that leads the project and makes all of the decisions about the codebase, business strategy, marketing, etc., but the team has led the project transparently and completely in the open to all outside contributors. The design is for the MKR holders to be increasingly empowered over time with MKR holders voting on all major decisions and having a strong voice in the direction of the project.

Anyone that wants to participate around the world can call into the weekly MakerDAO call. All of the team calls are recorded and open for the public to listen to (you can listen to all team calls from the past two years on the MakerDAO Soundcloud stream here). The RocketChat and Reddit are equally accessible forums that anyone can utilize to observe or contribute to the project. Founder Rune is especially engaging on Reddit (it turns out Reddit comment karma can be a useful metric by which to evaluate a founder). This approach has led MakerDAO to grow into a vibrant global community of people who are aligned by a shared value system and vision for the future.

Getting from project launch to product launch takes lots of time

MakerDAO publicly announced the project back in early 2015 and was one of the very first projects built on top of Ethereum. The first Mainnet product, the Dai stablecoin, didn’t launch until December of 2017, nearly three years after the project launch.

There is a reason that it takes so long to build in the space right now; we’re still in the early days of the decentralized web. The main programming language for Ethereum, Solidity, is buggy and hard to write with mathematical proofs to verify there’s no vulnerabilities (aka formal verification) and there aren’t many great alternatives currently. When you’re building applications that involve value transfer and exchange, buggy code is not acceptable (TheDAO, Polkadot, and countless other projects have learned that the hard way). The MakerDAO team has been careful and deliberate about launching on the Mainnet. Before the product launch in December, several years of audits, testing, and tweaking of the code was necessary.

For investors, the big takeaway on timing is to set your expectations; seeing a product months after project launch/ICO is unrealistic in most cases and years is more realistic. And for entrepreneurs, it’s always better to under promise and over deliver. The time and effort required to get from project launch to product launch should always be emphasized.

So what?

My fear about all of the focus currently being placed on prices and amounts raised in the blockchain ecosystem is that people are losing focus on the most important thing: building impactful products that change people’s lives. I believe having a shared understanding of lessons learned along the way increases the probability that important products actually get built, and many of the most worthwhile lessons will come from teams that are heads down building.

MakerDAO is still in the early days to be clear, but has built a useful decentralized stablecoin product (Dai) on the Ethereum Mainnet that anyone can use and has learned many important lessons along the way that entrepreneurs and investors can learn from.

Disclosure: 1confirmation is a holder of MKR tokens. This post is in no way promoting MKR as an investment. In fact, you should not buy MKR unless you’re a professional who is able to spend significant time understanding the complexity of the Maker Collateralized Debt System and contributing to the Maker community.