USDS Code, Formerly DAI, Generates Controversy Among DeFi Users
In the decentralized finance (DeFi) community, the recent rebranding of MakerDAO to Sky has sparked intense debate.
MakerDAO recently transformed its flagship decentralized stablecoin, DAI, into a new version called USDS (Sky Dollar) as part of a change now known as the Sky Protocol.
While these changes are intended to improve accessibility and usability in the decentralized financial ecosystem, the introduction of asset-freezing code in USDS has raised concerns about the new protocol’s true decentralized nature.
The Controversy Surrounding the New USDS Stablecoin
MakerDAO has been a key pillar in building a robust DeFi ecosystem. However, its reputation has taken a hit following the announcement of the new USDS stablecoin. A controversial feature that allows issuers to freeze assets is built into this new token, which replaces DAI.
This feature is common in centralized stablecoins such as USDT and USDC, and was highlighted by programmer Laurence Day on social media, saying that “New DAI has a freeze function. Olympus has fallen.” However, in the DeFi space, it has been the subject of criticism for being against the principles of decentralization.
The existence of this freeze feature in the new USDS stablecoin has been confirmed by Rune Christensen, co-founder of MakerDAO. However, Christensen’s explanation is that while this feature is present in the USDS code, it will not be active at the time of the stablecoin’s launch.
Furthermore, Christensen argued that since USDS will be partially backed by US Treasury bonds, this freeze feature is necessary to ensure compliance with legal systems:
“Actually there will be no freeze function at launch, there will just be an upgrade ability. So later governance can decide how to implement something like a freeze function based on considering all data and find something that protects against as many risk factors as possible,” he posted on X.
Other users and experts have expressed dissatisfaction with the new changes introduced to the stablecoin, pointing out that it contradicts the original mission of MakerDAO. Some have even stated that this change may mark the beginning of the protocol’s irrelevance, suggesting that more reliable and truly decentralized alternatives may emerge to fill DAI’s void.
MakerDAO’s Rebranding to Sky and Its New Tokens
MakerDAO’s rebranding to Sky includes not only the creation of the USDS, but also a name change for its governance token. It is now called SKY, with a conversion rate of 1:24,000 from MKR. Reportedly, this change aims to rebrand the protocol and attract a broader and more diverse user base.
Christensen has described the rebranding as part of a broader plan, dubbed “Endgame,” aimed at making decentralized finance easier to access and more attractive to new users. Part of the strategy is the creation of a new website and app, Sky.money, that will facilitate interaction with the protocol’s various features.
Despite these attempts to modernize and increase accessibility, however, the name change and the introduction of USDS have been met with skepticism in the DeFi community, which has spoken out against the introduction of features that seem to align more with the practices of traditional financial institutions than with the decentralized ideals of the blockchain industry.
So far, the transition from DAI to USDS and from MakerDAO to the Sky protocol represents a critical moment for the future of decentralized finance and its users. Hopefully, concerns about centralization and censorship will be adequately addressed in the new stablecoin as the protocol evolves.
By Audy Castaneda