MakerDAO Community Proposal Could Result In New Governance Token

The MakerDAO community received a proposal to replace the MKR governance token. The proposal introduces a new stkMKR token which will act as a bonding asset for MKR staked in governance proposals.

The proposal was made on the MakerDAO forum by the community’s leader on Monday, March 14, which outlines an alternative token economic mechanism. The proposal also highlights some issues and inefficiencies with the current tokenomics model, which operates as a “buyback and burn” mechanism.

The proponent suggested that there are several drawbacks to the existing mechanism, including a lack of targeted incentives since buyback and burn returns all capital to MKR holders. The rewards system detailed in the proposal is an improved version of the existing model and will offer greater incentives to people who stake cryptocurrency on the network.

Many forum members commented on the recent proposal within just a few hours of it being posted, with the majority of the comments relating to the technicalities of the solution being positive.

The next phase of the discussion will see the proposal be submitted as a Maker Improvement Proposal (MIP) and entered into a formal vote by existing MKR token holders, which takes approximately 2 weeks. Should the proposal pass a full governance vote, the protocol could replace its current governance token, MKR, with a new token called stkMKR.

Despite the proposal receiving a number of positive comments, the community behind the decentralized stablecoin platform is still mulling over the potential major tokenomics shift which could replace the currency Maker (MKR) governance token.