MakerDAO members reject proposals to make the protocol more centralized
In a big win for decentralization, members of MakerDao, the decentralized autonomous organization behind the Dai (DAI) stablecoin, recently rejected proposals to make the protocol’s governance structure more centralized.
On June 27, members of MakerDAO (MKR) discussed three proposals. The proposals seek to restructure the leadership of the decentralized autonomous organization (DAO) into something more akin to a traditional corporation, including a board of directors.
These proposals were drafted as potential solutions to make DAOs more efficient and capable of enforcing "high-level decisions." The creator of one of the proposals, MakerDAO Protocol Engineering Core Unit member Sam McPherson, expressed his dissatisfaction with the current governance model, tweeting:
"The status quo doesn't work...DAOs are not currently designed to make high-level decisions, which leads to decision paralysis or sub-optimal decisions by less informed parties."
The first proposal, dubbed LOVE-001, proposes the creation of a new "oversight core." Essentially, the proposal would create a new department that "regularly audits the activities of other core departments"—a technical way of saying that a more centralized department would be able to Decided to implement additional controls.
More than 60% of the 293,911 MKR delegated governance tokens were used to vote against the LOVE-001 proposal.
According to MakerDAO’s GitHub, a second proposal called “Makershire Hathaway” proposes the creation of a $10 million special-purpose fund designed to earn income from the protocol’s stablecoin reserves. Makershire Hathaway was rejected by 65% of voters.
A third proposal, called MIP75c3-SP1, proposes a discretionary fund overseen by a new "Growth Task Force" aimed at growing Maker "as fast as possible." The proposal received the most unilateral vetoes, with 76% of all MKR tokens used to vote against it.
These three proposals appear to be stirring the tide, with MakerDAO noting that they saw the largest governance vote to date.
The rejection of these proposals, combined with the historic turnout, suggests that MakerDAO members may strongly favor an appropriate decentralized governance model, setting a strong precedent for other decentralized finance (DeFi) protocols.
MakerDAO is the governing body of the Maker protocol, which issues the dollar-pegged DAI stablecoin in exchange for user deposits of ethereum (ETH), wrapped bitcoin (WBTC) and nearly 30 other cryptocurrencies.
This month, MakerDAO took another big step. The protocol says it intends to invest some of its unused stablecoin reserves in traditional financial assets. Earlier this month, amid concerns over the contagion of the DeFi crisis, MakerDao voted to cut off lending platform Aave’s ability to generate Dai for its loan pool without collateral.
Despite a series of key developments in DeFi protocols, Maker’s governance token, MKR, is down about 10% over the past week and is currently trading at $880, according to the Cointelegraph Price Index.