As a seasoned analyst with years of experience in the cryptocurrency market and a keen interest in DeFi protocols, I find myself intrigued by MakerDAO’s recent transformation into Sky. While the new development offers an appealing prospect of a simplified user experience, the introduction of the USDS stablecoin and SKY governance token raises some valid concerns among community members.
Recently, the well-known DeFi platform MakerDAO went through a significant change within its system. This move has sparked some controversy among its users. On Tuesday, this collateralized debt protocol underwent a rebranding to Sky and unveiled plans to launch its stablecoin USDS and governance token SKY on September 18.
Community Members Question USDS Freeze Function
Using Sky, the protocol intends to streamline user interaction by launching both a fresh website and application. These new digital assets are set to debut, but they won’t affect the ongoing presence of Dai (DAI) stablecoin or MKR token. Instead, users will have the option to transition to these new tokens if they prefer. Each MKR token is equivalent to 24,000 SKY tokens, and DAI will be converted into USD at a one-to-one ratio when exchanged.
According to its features, the USDS stablecoin can be controlled by its issuer to freeze the token. When some online users noticed this feature, they raised concerns about the potential centralization of the protocol. Digital marketing expert “Tunez” voiced his objections to the freezing function on platform X.
Tunez queried his audience, “Aren’t we undermining the goal of the project here? Could there be a point I’m overlooking?”
Remarkably, Rune Christensen, founder and CEO of Sky, previously stated that there wouldn’t be a ‘freeze’ feature at the launch of the stablecoin but rather a protocol upgrade instead. Later on, he emphasized that governance could decide on implementing something similar to a ‘freeze’ function in the future.
Dai will carry on functioning exactly as it has been, so you can still use it. Upgrading to USDS is not compulsory, and only USDS offers a freezing option. Importantly, Dai being an unchangeable smart contract means that it cannot be modified.
— Rune (@RuneKek) August 27, 2024
In my years of experience, I have learned that a well-rounded approach is essential for mitigating risks effectively. From personal trials and errors, I’ve discovered that it’s not just about addressing one issue at a time; instead, it’s about finding solutions that tackle multiple risk factors simultaneously. This holistic strategy has proven to be more effective in the long run, as it minimizes potential vulnerabilities across various aspects of life. So, whenever I face new challenges, I strive to find solutions that offer comprehensive protection against a wide range of risks, rather than focusing on isolated problems.
MakerDAO Users to Choose Between DAI and USDS
A few months past, Christensen explained the upcoming tokens from Maker. He highlighted that upon activation of the freeze function, it is customary to abide by the regulations from jurisdictions where Maker requires strong assurance that legal systems will uphold recourse against real-world asset collateral, following the rule of law.
As a crypto investor, I share Adam Cochran’s perspective that the implementation of a freeze function is crucial for the USDS backed by the United States Treasuries. In addition to the freeze function being necessary to secure T-bill yield backing, Cochran also suggests that Maker would require a VPN jurisdiction blocker for similar reasons. However, it’s worth noting that this freeze function does not apply to DAI.
Speaking on what to look forward to, Christensen says:
“Dai is an immutable smart contract and cannot be altered.”
This recent advancement appears to be part of Maker’s plan to achieve its “Endgame” blueprint, a strategic direction that was unveiled during the first quarter.
At its debut, the lending platform stated that the main goal for the project is to significantly boost the supply of the Dai stablecoin to approximately 100 billion tokens. The two initial tokens, previously known as NewStable and NewGovToken, are planned for release in the summer season of 2024.
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2024-08-28 13:22