Members of MakerDAO reject the proposal for further centralization

01-Jul-2022 By: Anirudh Trivedi

Members of MakerDAO reject the proposal for further centralization

Members of MakerDAO, the lending platform that powers the Dai (DAI) stablecoin, have rejected a number of proposals that would have seen the protocol's governance structure become more centralised, marking a significant victory for decentralisation.

The MakerDAO (MKR) community gathered on June 27 to discuss three ideas that would have changed the decentralised autonomous organization's (DAO) leadership structure to more closely resemble a conventional company, complete with a board of directors.

The ideas were created as potential ways to increase the DAO's effectiveness and its capacity to carry out "high-level choices." Sam McPherson, the author of one of the ideas and a member of the MakerDAO Protocol Engineering Core Unit, tweeted his displeasure with the present governance model:

“The present situation is ineffective. Because the DAO is not yet set up to make important choices, this results in decision paralysis or poor judgments being made by those who are less knowledgeable.”

The first suggestion, LOVE-001, was for establishing a new "oversight Core Unit." In essence, this plan called for the creation of a new unit that would "periodically audit the activity of other Core Units," which is a fancy way of stating that a more centralised authority would have greater power to influence choices on new collateral.

Among the 293,911 MKR delegated governance tokens, more over 60% were utilised to vote against the LOVE-001 proposal.

The second plan, dubbed "Makershire Hathaway," according to MakerDAO's GitHub, would establish a $10 million special purpose fund with the aim of generating profit from the protocol's stablecoin reserves. Voters opposed Makershire Hathaway by a margin of 65%.

The third plan, referred to simply as MIP75c3-SP1, called for creating a discretionary fund that would be managed by a brand-new "Growth Task Force" with the goal of expanding Maker "as quickly as feasible." The majority of MKR tokens were utilised to vote against this motion, which was rejected unilaterally with little over 76 percent of the total vote.

MakerDAO said that they saw the most governance voting activity they had ever seen after the three proposals, which seemed to have stirred the pot.

A truly decentralised type of governance may be highly preferred by MakerDAO members, as seen by the rejection of these ideas and the historically high election turnout, creating a strong precedent for future decentralised finance (DeFi) protocols.

The Maker protocol is managed by MakerDAO, which in turn releases DAI stablecoins linked to the US dollar in return for user deposits of ETH, wBTC, and almost 30 other cryptocurrencies.

This month, MakerDAO made another significant step by announcing its intention to put some of its idle stablecoin holdings into conventional financial assets. MakerDao decided earlier this month to stop lending platform Aave from generating Dai for its lending pool without security as concerns about DeFi contagion expanded.

Even though the DeFi system has seen a number of significant advancements, Maker's governance token MKR has declined by almost 9.59% over the past week and is presently selling at $908, according to the CoinGabbar price index.

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