MakerDAO community plan to replace MKR governance token

March 16, 2022

MakerDAO community proposal to replace MKR governance token

The plan introduces a new stkMKR token which will work as a bonding asset for MKR risked in governance plans. The organization behind decentralized stablecoin forum MakerDAO is reflecting upon an important tokenomics change that could replace its governance token, Maker (MKR). If the plan passes an entire governance vote, the strategy could replace its recent governance token, MKR, with a new token called stkMKR. There were various responses to the suggestion in just a few hours, most of which were optimistic regarding the technicalities of the solution.

The proposal and discussion stage will need to be submitted as a Maker Improvement Proposal, MIP, for an accepted vote by MKR holders, which usually takes 2 weeks. The staking proposal handles a few problems and inefficiencies with the recent tokenomics model, which operates a buyback and burn mechanism. This was indicated by money supply that there are various shortcomings to the current mechanism comprising a lack of targeted incentives since buyback and burn refunds all capital to MKR holders. There is a weak crypto narrative, as per the monet-supply, who said that MKR issuance could be put toward enhancing the protocol. The recommended explanation is a new stkMKR token which would displace MKR as the core governance token of MakerDAO.

Monet-supply told that the rewards mechanism has been enhanced upon and there will be tremendous incentives to stake using the modern system. MakerDAO permits users to deposit crypto assets as collateral to develop the decentralized stablecoin Dai, DAI. The DAI is scorched when the loan is paid back and the collateral is revoked. MKR rates were marketing flat at $1766 at the time of publication. Nevertheless, the token has declined 11% in the last fortnight and is nowadays below 72% to an all-time high of $6292.

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