Sky’s (MakerDAO) USDS Stablecoin Sparks Controversy, Founder Rune Christensen Waves Off Worries

Key Takeaways

• MakerDAO rebranded to SKY, but its new stablecoin sparked controversy over the freeze function.
• MakerDAO claims the rebrand is to offer a better user experience.
• MakerDAO co-founder clarifies the freeze function is optional and won’t impact DAI.

Sky’s (formerly MakerDAO) highly anticipated rebranding has hit turbulence shortly after takeoff, as its newly minted USDS stablecoin has ignited a firestorm of controversy.

The controversy erupted on Tuesday, Aug. 27, when an X post alleged that DAI, Sky’s flagship stablecoin, was quietly introducing a freeze function.

The bombshell sent shockwaves through the DeFi community, with critics swiftly condemning Sky for the move, which many saw as a blatant oxymoron: a decentralized stablecoin with a censorship tool.

MakerDAO Co-Founder Says Freeze Functional Is Optional

Sky (MakerDAO) co-founder Rune Christensen called the comment misleading and assured that DAI will continue functioning as before.

Christensen clarified that only the new stablecoin USDS has the freeze function, while DAI will remain immutable. He also added that the DAI holders can upgrade to USDS, but it’s not mandatory.

Christensen said the freeze function would not be available at launch; it would be an upgrade option.

He assured that the governance would implement it based on community input and something that would protect “against as many risk factors as possible.”

While the freeze function is not a bad tool, it certainly goes against DeFi’s ethos and MakerDAO’s core principle. Many social media users called it the end of the MakerDAO era.

Maker’s Rebrand

MakerDAO is one of the older decentralized finance pioneers known for building solutions like DAI.

As part of its effort to revamp and improve user experience, the company has undergone a rebranding to Sky.

The rebrand is set to be completed by September 18, with a new website and app launching on the same day.

Alongside the new brand, Sky is introducing two new tokens: SKY, a governance token, and USDS, a stablecoin dubbed the Sky Dollar.

Existing holders of MKR and DAI tokens can seamlessly switch to these new tokens, which will earn rewards simply for being held.

Moreover, both tokens will be eligible for rewards in upcoming Sky-ecosystem projects, dubbed Stars, which are scheduled to launch in the coming months.

To facilitate a smooth transition, MakerDAO has also announced a transition option, allowing DAI holders to easily switch to the new USDS stablecoin.

The rebranding marks a strategic move by MakerDAO to regain its former glory and reassert its presence in the DeFi space. Having once boasted a total value locked of over $20 billion, the company has seen this number dwindle to $4.8 billion, according to DeFiLlama .

With its new direction, Sky aims to revitalize its position and tap into the growing DeFi market.

About the Author

Prashant Jha

Prashant Jha is a crypto-journalist focused on the US and UK markets, his interests lie in blockchain technology and crypto adoption across emerging economies.

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