This is a simple, and thus great, way of using Makers incentive structure against itself.<p>While specific to the MakerDAO ecosystem, it effectively highlights the complexity and challenge in adequately creating a <i>decentralized</i> governance structure.<p>Essentially, to remove centralized control, you must structure incentives such that the system ultimately acts as intended, but there is always going to be ways to subvert the incentive structure. The goal is that costs of conducting such activity are too much to be reasonably conducted.<p>It seems that these systems will take years and years in the wild before their incentive structures are iterated upon enough to finally get to a point where truly large business value will flow through it. Exercises like this are useful in either disproving this whole concept or incrementally improving it.
The analogy with the Prisoners' Dilemma is interesting here, but doesn't feel quite right. In the comments, BenWang summarizes it like: "the effects of the attacker will happen to all token holders regardless of what you decide to do with your tokens, therefore, you might as well rent them out."<p>It seems that the MKR holder in this case could rent them out... or sell MKR and exit their position entirely. And this seriously discounts the fact that eroding Maker security is immediately obvious and can get priced into the MKR token very quickly, defeating the point of a few percentage points of yield.<p>It makes sense on some conceptual level, but it's not clear that the magnitudes of the incentives result in this toxic game theoretic equilibrium.