Author: Martin Young, CoinTelegraph; Translated by: Wuzhu, Golden Finance
Decentralized finance project Maker, which has rebranded to Sky, has faced backlash for its recently upgraded stablecoin, with observers noting that it will feature a so-called “freeze feature.”
Some online observers have pointed out that Maker’s new stablecoin, USDS, will allegedly have a feature that allows its issuer to freeze tokens, adding that this could call into question the protocol’s decentralization.
“Doesn’t this completely defeat the purpose of the project? Am I missing something?” Monad marketer “Tunez” asked his 155,000 X followers on August 28.
In an August 27 X post, protocol co-founder Rune Christensen clarified that there will be no feature freeze at launch, only upgrades, adding:
“So governance can later decide how to implement something like a freeze function based on taking all the data into account and finding ways to protect against risk factors as much as possible.”
In a May forum post explaining Maker’s upcoming new token, he said that once activated, the freeze function is generally expected to “follow the rule of law in jurisdictions where Maker needs a high degree of certainty that the legal system will enforce recourse against RWA [real-world asset] collateral.”
Adam Cochran, partner at Cinneamhain Ventures, commented that this is a necessary condition for backing new stablecoins with U.S. Treasuries.
“The reality is that if you want Treasury yield support, even through secondary Treasury trading, you need freeze functionality and VPN jurisdiction blockers.”
Maker rebranded to Sky this week, while also renaming its DAI stablecoin to USDS. The project’s website blocked access via VPN, sparking further derision from the DeFi community.
Cochran added that freezing features and VPN blocking are "trade-offs that the industry needs to decide on."
“You can’t enjoy the benefits of the U.S. TradFi system if there are no rules.”
Christensen said a post claiming that Phoenix Labs and Spark Protocol CEO Sam MacPherson said the new Dai will have a freezing feature is misleading.
“Dai will continue to function as before and will still be usable,” he wrote. “Upgrading to USDS is optional, and only USDS will have the freeze feature. Dai is an immutable smart contract and cannot be changed.”
Source: Rune Christensen
Centralized stablecoins, such as Tether, also have the ability to be frozen by their issuers, as demonstrated when the company froze $5.2 million worth of USDT in May following a phishing scam.
It now appears that Maker took this route in order to achieve its “end game” roadmap, which involves backing the stablecoin with real-world assets and expanding the supply to compete with Tether.
