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MakerDAO members shoot down proposal for extra centralization

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In a significant win for decentralization, members of MakerDAO, the lending protocol behind the Dai (DAI) stablecoin, have rejected a sequence of proposals that might have seen the protocol’s governance construction turn into extra centralized. 

On June 27, the members of MakerDAO (MKR) confirmed as much as take into account three proposals that might have reorganized the management of the decentralized autonomous group (DAO) into one thing that extra intently resembles a conventional company, full with a board of administrators.

The proposals have been drafted as potential options for making the DAO extra environment friendly and extra able to executing “high-level selections.” Author of one of many proposals and member of the MakerDAO Protocol Engineering Core Unit, Sam McPherson voiced his frustration concerning the present governance mannequin, tweeting:

“The established order isn’t working… The DAO isn’t at present set as much as make high-level selections which is resulting in choice paralysis or much less knowledgeable events making sub-optimal calls.”

The first proposal, known as LOVE-001, recommended creating a brand new “oversight Core Unit.” Essentially this proposal would have established a brand new unit that might “periodically audit the exercise of different Core Units” — a technical approach of claiming {that a} extra centralized authority can be able to exerting extra management over selections regarding new collateral.

Over 60% of the 293,911 MKR delegated governance tokens have been used to vote in opposition to the LOVE-001 proposal.

According to MakerDAO’s GitHub, the second proposal known as “Makershire Hathaway” would create a 10-million-dollar particular objective fund designed to earn yield from the protocol’s stablecoin reserves. Makershire Hathaway was rejected by 65% of voters.

The third proposal, identified solely as MIP75c3-SP1, recommended the institution of a discretionary fund that might be overseen by a brand new “Growth Task Force” that might purpose to develop Maker “as quick as attainable.” This proposal obtained essentially the most unilateral rejection, with simply over 76% of MKR tokens used to vote in opposition to it.

The three proposals appeared to have stirred the pot, with MakerDAO noting that they witnessed the most important quantity of governance voting exercise up to now.

The rejection of those proposals mixed with the historic voter turnout signifies that MakerDAO members could strongly favor a correctly decentralized mannequin of governance, setting a powerful precedent for different decentralized finance (DeFi) protocols.

MakerDAO is the governing physique of the Maker protocol, which points U.S. dollar-pegged DAI stablecoins in trade for person deposits of Ether (ETH), Wrapped Bitcoin (wBTC) and practically 30 different cryptocurrencies.

Related: Less than 1% of all holders have 90% of the voting energy in DAOs: Report

MakerDAO took one other main step this month, with the protocol signaling its intent to take a position a portion of its dormant stablecoin reserves into conventional monetary belongings. Earlier this month, as fears of DeFi contagion unfold, MakerDao voted to chop off lending platform Aave’s capability to generate Dai for its lending pool with out collateral.

Despite the sequence of essential developments for the DeFi protocol, Maker’s governance token MKR is down roughly 10% over the previous week, at present buying and selling for $880 in accordance with Cointelegraph Price Index.

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