In a major victory for decentralization, members of MakerDAO, the lending protocol behind the stablecoin Dai (DAI), have rejected a series of proposals that would have seen the protocol’s governance structure become more centralized.
On Monday, MakerDAO members met to consider three proposals that would have restructured the leadership of the decentralized autonomous organization (DAO) into something that more closely resembles a full traditional corporation, complete with a board of directors.
The proposals were drafted as possible solutions to make the DAO more efficient and more capable of making “high-level decisions”. The author of one of the proposals and a member of the MakerDAO Protocol Engineering Core Unit, Sam MacPherson, expressed frustration about the current governance model, tweeting:
“The status quo is not working… The DAO is not currently equipped to make high-level decisions, which is leading to decision paralysis or less-informed parties making suboptimal decisions.”
The first proposal, called LOVE-001, suggested the creation of a new “Central Supervision Unit”. Essentially, this proposal would have established a new unit that would “periodically audit the activity of other central units,” a technical way of saying that a more centralized authority would be able to exercise additional control over decisions regarding the new guarantees.
Over 60% of the 293,911 Maker Delegated Governance Tokens (MKR) were used to vote against proposal LOVE-001.
According to MakerDAO’s GitHub, the second proposal, called “Makershire Hathaway”would create a $10 million special purpose fund designed to earn returns from the protocol’s stablecoin reserves. Makershire Hathaway was rejected by 65% of the voters.
The third proposal, known only as MIP75c3-SP1, suggested creating a discretionary fund to be overseen by a new “Growth Task Force” that would aim to grow Maker “as fast as possible.” This proposal received the largest unilateral rejection, with just over 76% of MKR tokens voting against.
The three proposals appear to have stirred up the hornet’s nest, with MakerDAO noting that they witnessed the most governance voting activity to date.
Average number of unique poll voters per month also hit an all-time high!
57 is the new record. Previous record was 38.
— Maker (@MakerDAO) June 26, 2022
The rejection of these proposals, combined with the historic participation of the holders, indicates that MakerDAO members may strongly prefer a properly decentralized governance model, setting a strong precedent for other decentralized finance (DeFi) protocols.
MakerDAO is the governing body of the Maker protocol, which issues USD-valued DAI stablecoins in exchange for user deposits of Ether (ETH), Wrapped Bitcoin (wBTC), and nearly 30 other cryptocurrencies.
MakerDAO took another important step this month, with the protocol signaling its intend to invest a portion of its dormant stablecoin reserves in traditional financial assets. Also earlier this month, as fears of DeFi contagion spread, MakerDao voted to cut off lending platform Aave’s ability to generate DAI for its unsecured lending pool.
Despite the series of crucial events for the DeFi protocol, Maker governance token MKR is down roughly 10% in the past week, currently trading at $880, according to the Cointelegraph price index.
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