Maker, recently rebranded to Sky, is facing backlash over its USDS stablecoin freeze function, which has raised concerns about decentralization within the project. The controversial feature allows the issuer to freeze transactions, sparking criticism from the community and intensifying scrutiny of the protocol’s commitment to decentralization.
Critics argue that the inclusion of a freeze function in the upgraded stablecoin goes against the core principles of decentralization that Maker, now Sky, has been known for. The ability for transactions to be halted under certain conditions has led to questions about how well this aligns with the project’s ethos of decentralization.
In response to the concerns raised by the community, co-founder Rune Christensen has stepped in to address the issue. He reassured users that the freeze function will not be active at the launch of USDS. Instead, the stablecoin will initially include an upgrade capability that may allow future governance decisions to determine the implementation of such a feature.
Christensen emphasized that any decision to activate the freeze function would be carefully considered, taking into account various risk factors to ensure the integrity of the system. He also highlighted that if the freeze function were to be implemented, it would adhere to legal frameworks in jurisdictions where Sky operates, providing a higher level of legal certainty for the real-world asset (RWA) collateral backing USDS.
Adam Cochran from Cinneamhain Ventures supported this perspective, stating that a freeze function is necessary for securing backing from US Treasury securities and integrating with traditional finance systems. Cochran highlighted the importance of balancing the benefits of the traditional finance system with the regulatory requirements that come with it.
Despite the reassurances from Christensen and support from industry experts like Cochran, concerns about the freeze function persist within the community. Some members believe that any form of transaction freezing goes against the principles of decentralization and could potentially undermine the project’s credibility.
Apart from the freeze function controversy, the rebranding of Maker to Sky and the transformation of its Dai stablecoin to USDS have also sparked criticism. In addition, the project’s website blocking VPN access has further fueled concerns about transparency and user accessibility.
Christensen has acknowledged the criticisms surrounding the rebranding and VPN blocking, assuring users that the original Dai stablecoin remains unchanged and usable. He emphasized that USDS, with the freeze function included as part of Sky’s “Endgame” roadmap, aims to enhance the stability and functionality of the stablecoin.
Moving forward, it remains to be seen how Maker’s transition to Sky and the inclusion of the freeze function in USDS will impact the project’s reputation and standing within the decentralized finance (DeFi) community. As the industry continues to evolve, finding the right balance between innovation, regulatory compliance, and decentralization will be key for projects like Sky to succeed in the long run.
