MakerDAO Proposes New Token
The MakerDAO community has proposed a new governance token that would be apart of a potential reworking of its tokenomics.
MakerDAO is a decentralized organization that has created a protocol that allows for borrowing and lending on the Ethereum blockchain. It also is behind the creation and issuance of the DAI stablecoin, a cryptocurrency that replicates the value of stable FIAT currencies such as the U.S. dollar. Users are able to deposit their ETH as collateral in certain smart contracts and are issued DAI as part of the terms of the loan agreement. When they want to pay back the loan, they return the DAI along with any fees and the ETH is unlocked and returned back to the borrower. The MKR token acts as a governance token for MakerDAO, where holders can propose and vote on changes to the protocol.
A recent post on the MakerDAO forum by a notable member of the community has outlined potential changes to the economics of the lending protocol, including how new tokens are issued and changes to the burn mechanism. The proposal calls for a new token called stkMKR, which would replace MKR as the main governance token for MakerDAO. The stkMKR would act as a “staked” version of the governance token that incentivizes buying and holding the token through staking rewards along with rewards for participating in various voting processes.
The fundamental protocol changes proposed would have a significant impact on the MKR protocol as we know it. The changes aim to:
Incentivize governance participation with greater rewards
Improve value accrual for MKR token holders through periodic staking rewards
Increase governance security by encouraging long term holding and participation
Increase resilience to credit losses by encouraging “lock-in” periods through staking which would keep a greater share of MKR tokens off the market during market crashes and periods of volatility
The proposed changes are ambitious in nature. Whether or not it will be successful remains to be seen, but the fact that a decentralized autonomous organization (DAO) made up of members that are spread across the globe can come together to propose valid improvements to an already successful financial system is remarkable. DAOs are already proving that a centralized management apparatus is not necessary to building, maintaining, and innovating a business entity.