• MakerDAO’s governance token has seen a 37% decrease in 24H trading volume and 3.7% dip in token price over the last 24 hours.
• Following sanctions on Tornado Cash, MakerDAO proposed Endgame plan to enhance its censorship resistance and strengthen its decentralized finance (DeFi) platform operating on the Ethereum blockchain.
• Critics of the plan worry that it creates a potential algorithmic death spiral for DAI similar to what happened during the Terra/Luna UST collapse.
MakerDAO’s Governance Token Sees Drop in Trading Volume
MakerDAO’s governance token has seen a 37% decrease in 24H trading volume and a 3.7% dip in token price over the last 24 hours. The move follows significant changes proposed to Maker’s governance structure following warnings from co-founder Rune Christensen of government authorities targeting MakerDAO eventually.
Maker’s Endgame Plan To Enhance Censorship Resistance
In response to these warnings, Maker introduced their Endgame plan which aims to strengthen its decentralized finance (DeFi) platform operating on the Ethereum blockchain allowing users can create and trade stablecoins backed by collateral in cryptocurrencies with the governance of the platform and its stability maintained by the native token (MKR). The new system proposes dividing DAOs into smaller units known as MetaDAOs, each with distinct tokens and objectives, while limiting centralized assets backing DAI to 25% and introducing negative interest rates to reduce liquidation risks.
Critics Of Plan Worry About Algorithmic Death Spiral For DAI
However, critics of the plan worry that it creates a potential algorithmic death spiral for DAI similar to what happened during the Terra/Luna UST collapse. This is due to similarities between MakerDAO’s Endgame Tokenomics and Terra’s Seigniorage Mechanism which employs generating and destroying tokens in response to market demand, with new tokens created when stablecoin’s value drops and removed when it increases.
Terra Platform Employs Seigniorage Mechanism To Stabilize Prices
Similarly to MakerDAO’s Endgame Tokenomics, Terra also utilizes a seigniorage mechanism which involves creating and destroying tokens based on market demand; new tokens are created if stablecoin values drop while existing tokens are removed if prices increase again.
MakerDao’s decision may have serious impacts on their DeFi platform but only time will tell whether this move pays off or not as there are both pros & cons associated with it depending upon perspectives from different people involved within this project such as developers & investors alike..