The community behind the decentralized stablecoin platform MakerDAO is considering a major tokenomic change that could replace its governance token, Maker (MKR).
On Monday, the community leader monet-supply submitted a proposal on the MakerDAO forum, outlining an alternative economic mechanism for tokens. If the proposal passes in a full government vote, the protocol could replace its current governance token, MKR, with a new token called stkMKR.
The proposal received many responses within hours of its publication, most of them positive and related to the technical aspects of the solution. The proposal and discussion phase will have to be submitted as a Maker Improvement Proposal (MIP) for a formal vote by MKR holders, which typically takes two weeks.
The staking proposal addresses some problems and inefficiencies of the current tokenomics model, which operates with a “buy and burn” mechanism. According to monet-supply, the current mechanism has several drawbacks, including the lack of specific incentives, since the buyback and burn returns all the capital to MKR holders.
There is also a “weak crypto narrative,” according to monet-supply, which said that MKR issuance could go towards improving the protocol. The current system also has limited deterrence against governance attacks or vote rigging.
⚒️ @MonetSupply presented an idea of an alternative token economic mechanism that could supplement the current MKR buyback value accrual system.
stkMKR? Read the entire thread:https://t.co/1hEORZTblu
— Maker (@MakerDAO) March 14, 2022
⚒️ @MonetSupply presented an idea of an alternative token economic mechanism that could complement the current MKR buyback value accumulation system. stkMKR? Read the full thread here
The proposed solution is a new token, stkMKR, which would replace MKR as MakerDAO’s primary governance token. It would act as a staking or joining token issued to those who have deposited MKR for governance purposes.
“stkMKR will be non-transferable, and represents MKR staked in governance. Staked token holders will receive a portion of MKR tokens purchased through surplus auctions, so stkMKR will be backed by an increasing amount of MKR over time.”
Monet-supply said that the rewards mechanism has been improved and that there will be greater incentives to stake using the new system.
MakerDAO allows users to deposit crypto assets as collateral to generate the decentralized stablecoin Dai (DAI). This can be used in other places, such as other decentralized finance (DeFi) protocols or liquidity pools. DAI is burned when the “loan” is repaid and collateral is withdrawn.
MKR prices were trading flat on the day at $1,766 at the time of writing., according to CoinGecko. However, the token has fallen 11% in the last fortnight and is currently down 72% from its May 2021 all-time high of $6,292.
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