- Household DeFi protocol Maker replaced its decentralized DAI stablecoin with centralized USDS as it rebranded to Sky. Users are not happy.
As a researcher who has closely observed the crypto landscape for years, I must admit that the rebranding of Maker to Sky and the shift from DAI to USDS has left me both intrigued and concerned. While it’s exciting to see DeFi protocols evolving and aiming for wider adoption, the move towards centralization raises questions about the essence of decentralized finance.
In their rebranding process, the DeFi lending protocol previously known as Maker has now adopted the name Sky. As a result of this change, the stablecoin issued by Maker, DAI (the largest decentralized stablecoin in the crypto sphere), has been replaced by a new one called USDS. Simultaneously, the MKR token that governs Maker’s operations has been upgraded to the SKY governance token as part of the rebranding initiative.
Sky’s team proposes that rebranding will propel this protocol forward and encourage usage among DeFi novices. For example, Sky aims to attract users from centralized exchanges with its new stablecoin, which is secured by U.S. treasury bills. On the other hand, the previous version, DAI, was backed by various cryptocurrencies, ensuring its decentralized issuance and operation. However, it’s important to note that the protocol itself will continue to be decentralized and governed by the community as it once was under the Maker label. The move to adopt the U.S. dollar and dollar-backed reserves for the stablecoin is a strategic choice to rival established stablecoins like USDT and USDC.
Centralization Creeps In as Sky Backs USDS With Treasury Bills
The USDS implementation has got Sky’s user base and the wider crypto community worrying about the implications of a centralized stablecoin. For one, USDS will come with a freeze feature, like that of USDT and USDC, allowing Sky to block the movement of funds whenever it deems necessary. While USDT has actively used this feature to thwart cybercriminals from escaping with stolen proceeds, it still calls into question the power a firm has over a cryptocurrency. That feeling resonated strongly with the community as DAI, a decentralized stablecoin, became USDS, a centralized one.
Additionally, users noted that the Sky website employs VPN blockers in certain regions, suggesting that Sky, previously known as Maker, is pursuing a worldwide user base through a regulation-focused strategy. However, this approach involves compromising full decentralization by incorporating centralized procedures into specific aspects of its platform and operations.
Adam Cochran, a partner at Cinnemhain Ventures, pointed out that such measures were essential for Sky’s chosen course. In essence, he stated that if you aim to secure T-bill yield backing, even through secondary treasury transactions, you’ll inevitably require a freeze function and a VPN jurisdiction blocker. He further explained that this is a compromise the industry must consider, as you can’t enjoy the advantages of the US traditional financial system without adhering to its regulations.
Read More
- Hades Tier List: Fans Weigh In on the Best Characters and Their Unconventional Love Lives
- Smash or Pass: Analyzing the Hades Character Tier List Fun
- Why Final Fantasy Fans Crave the Return of Overworlds: A Dive into Nostalgia
- Sim Racing Setup Showcase: Community Reactions and Insights
- Understanding Movement Speed in Valorant: Knife vs. Abilities
- Why Destiny 2 Players Find the Pale Heart Lost Sectors Unenjoyable: A Deep Dive
- FutureNet Co-Founder Roman Ziemian Arrested in Montenegro Over $21M Theft
- How to Handle Smurfs in Valorant: A Guide from the Community
- Dead by Daylight: All Taurie Cain Perks
- Dead by Daylight Houndmaster Mori, Power, & Perks
2024-08-29 18:28