As the day goes by, it appears as though many crypto projects are pivoting to semi-decentralized systems. For clarity, this is when a project has its elements of “community-governance” but at the same time has a killswitch for a centralized third-party.
With the SEC continually carrying out its witch hunting of all things built on crypto, I can say that I'm not surprised that a number of projects raking in billions and controlling a vast market are taking these steps.
I mean, we should have known that something like this would happen when we collectively seeked “external revenue sources” for our crypto protocols and allowed ourselves to go seeking for that revenue too close to the very centralized bodies we are trying to replace.
Not sure what this bitch is on about? I'll save you the trouble:
MakerDAO rebrands to Sky, and it doesn't look good
With the launch of Sky, the upgraded tokens are introduced:
• $SKY: The upgraded version of MKR and governance token of the Sky ecosystem. Each MKR can be upgraded to 24,000 SKY.
• $USDS (Sky Dollar): The upgraded version of DAI, USDS is a stablecoin that gives access to native token rewards.
The announcement of the official rebrand of MakerDAO to Sky occurred on 27th August on Twitter.
This one came as a surprise to me, I mean I understood that MakerDAO was a terrible brand name, and DAI, whilst not a bad name in itself, when relating it to MakerDAO, it was simply off-putting. The team(centralized by the way) believed that DAI needed to sound a lot more like USD for easier recognition in the broader market.
Well, cool, it is pegged to USD, so no big deal there. But what's the problem with this rebrand?
Given that I never heard or read about this rebrand before now, I needed to find out if it was previously discussed and if it was agreed upon via community voting - as decentralized systems should work.
Turns out, there have in fact, been previous discussions dating back to 2022 to which a proposal was actually put up and was passed.
This should be a good thing that a proposal did exist, that it wasn't just some one-man decision type of rebranding, which is very possible with protocols like MakerDAO. But at the end of the day, it's hard to not conclude that even though a proposal was set in place, the votes were “bought?”
The critics following the story say that one man represented 63% of the turnover of 122 votes cast and 74% if influence is considered.
What does that even mean?
Most big voters are delegates (a cool system). They are paid in line with the amount of MKR they get delegated.
So it is fair to say that when your biggest sponsor is 51%+ of your compensation, you listen.
Which, oddly enough, brings #centralization
For clarity, the critic highlights that nearly three quarters of votes cast were delegated by Christensen, MakerDAO's founder who proposed this rebrand and called it the endgame. Additionally, his influence within the project also caused big voters to support the proposal.
Now, the last point isn't quite relevant or a big deal. When it comes to governance, there's always a group of people casting votes based off the interests of someone else they look up to and it can always be countered by the community despite the involvement of monetary incentives.
That said, the true centralization of votes is evident in first statement. Weirdly enough, the supply of Maker involved in voting this proposal was only 15%. For a project that has been arround for quite a while, I'm sure this was already predictable by judging previous governance voting turnover, anyone could tell what percentage of Maker would cast a vote.
I must say that the governance system of MakerDAO is pretty messed up. Literally anything can be passed and it is not as “decentralized” as it was made to look.
That said, now that the rebrand is done, what's now concerning is that with a governance system as this, DAI’s new version, the Sky Dollar(USDS) has a freeze function.
Yep, you read that right. Joining the likes of USDT and USDC, the largest decentralized stablecoin on the Ethereum blockchain is now simply the third largest centralized stablecoin.
When the Founder was questioned on this feature on Twitter, he claimed that the freeze function would be managed via decentralized consensus. Hard to take such statement seriously when there's evidence that SKY is a centralized protocol.
I would advise anyone that wishes to interact with this protocol to first read the terms of service, it has some pretty strong words which proves our argument of Sky being a centralized business.
Lots of prohibition to look out for.