In a major win for decentralization, members of MakerDAO, the lending protocol behind the Dai (DAI) stablecoin, have rejected a series of proposals that would have seen the protocol’s governance structure become more centralized.
On June 27, the members of MakerDAO (MKR) showed up to consider three proposals that would have reorganized the leadership of the decentralized autonomous organization (DAO) into something that more closely resembles a traditional corporation, complete with a board of directors.
The proposals were drafted as potential solutions for making the DAO more efficient and more capable of executing “high-level decisions.” Author of one of the proposals and member of the MakerDAO Protocol Engineering Core Unit, Sam McPherson voiced his frustration about the current governance model, tweeting:
“The status quo is not working… The DAO is not currently set up to make high-level decisions which is leading to decision paralysis or less informed parties making sub-optimal calls.”
The first proposal, called LOVE-001, suggested creating a new “oversight Core Unit.” Essentially this proposal would have established a new unit that would “periodically audit the activity of other Core Units” — a technical way of saying that a more centralized authority would be capable of exerting additional control over decisions concerning new collateral.
Over 60% of the 293,911 MKR delegated governance tokens were used to vote against the LOVE-001 proposal.
According to MakerDAO’s GitHub, the second proposal called “Makershire Hathaway” would create a 10-million-dollar special purpose fund designed to earn yield from the protocol’s stablecoin reserves. Makershire Hathaway was rejected by 65% of voters.
The third proposal, known only as MIP75c3-SP1, suggested the establishment of a discretionary fund that would be overseen by a new “Growth Task Force” that would aim to grow Maker “as fast as possible.” This proposal received the most unilateral rejection, with just over 76% of MKR tokens used to vote against it.
The three proposals appeared to have stirred the pot, with MakerDAO noting that they witnessed the largest amount of governance voting activity to date.
Average number of unique poll voters per month also hit an all-time high!
— Maker (@MakerDAO) June 26, 2022
57 is the new record. Previous record was 38.
4/ pic.twitter.com/aQqJWYmgHd
The rejection of these proposals combined with the historic voter turnout indicates that MakerDAO members may strongly prefer a properly decentralized model of governance, setting a strong precedent for other decentralized finance (DeFi) protocols.
MakerDAO is the governing body of the Maker protocol, which issues U.S. dollar-pegged DAI stablecoins in exchange for user deposits of Ether (ETH), Wrapped Bitcoin (wBTC) and nearly 30 other cryptocurrencies.
Related: Less than 1% of all holders have 90% of the voting power in DAOs: Report
MakerDAO took another major step this month, with the protocol signaling its intent to invest a portion of its dormant stablecoin reserves into traditional financial assets. Earlier this month, as fears of DeFi contagion spread, MakerDao voted to cut off lending platform Aave’s ability to generate Dai for its lending pool without collateral.
Despite the series of crucial developments for the DeFi protocol, Maker’s governance token MKR is down roughly 10% over the past week, currently trading for $880 according to Cointelegraph Price Index.