According to an after on the MakerDAO Forum, the financial services protocol could replace its governance token MKR with a new token called stkMKR. The proposal has been made to address criticism of MKR’s tokenomics.
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New MKR tokenomics can complement and enhance previous benefits and incentives. The proposal emphasized that stkMKR will maintain MKR’s current combustion mechanism and allow users to reinvest their dividends and other payouts without spending money on gas, while maintaining tax efficiency.
In previous considerations, stkMKR will try to draw more attention to the Maker and the MakerDAO by amplifying its story. This could potentially impact the price of its new governance token by attracting more users and updating some of its key components. The proposal claims:
A new token, stkMKR, replaces MKR as MakerDAO’s core governance token. stkMKR is non-transferable and represents MKR involved in governance. Holders of staked tokens will receive a portion of the MKR tokens purchased through excess auctions, so stkMKR will be backed by an increasing number of MKR (automatically compiled like xSUSHI) over time.
In addition, the proposal claims that the MakerDAO will become more resilient against potential bad actors and malicious proposals and improve incentives for investors. Currently, the protocol offers users rewards through buybacks and burn returns, but the new proposal will try to create more incentives for those users who “offer excess value”.
As the post claims, stkMKR and its mechanism were inspired by the Cosmos governance model and by the tokenomics surrounding tokens stkAAVE and xSUSHI. The proposal added:
Retiring from stkMKR will require you to go through a preset disconnection period, which improves protocol resilience and governance security (similar to Cosmos and stkAAVE).
In addition, the proposal contemplates that a portion of MKR in the Combustion Mechanism protocol would be diverted directly to stkMKR holders, and be combined with another pool that would “soften yield volatility” and support Maker in difficult times, as seen below.
Source: MakerDAO Forum
MakerDAO and the new tokenomics
Many protocols have tried to update and improve their tokenomics and governance model. The DeFi sector has seen a surge in competitive environments. From Solana to Terra, Avalanche, Cosmos and other experienced protocols like Maker must stay competitive.
The proposal aims to motivate users to participate in the new governance model by improving commitment rewards and delegation rates. The proposal also aims to increase the value of the MKR with “concrete APR figures and supply constraint” and increase protection against volatile periods in the market while avoiding credit losses.
If approved, the proposal will change the following components of the MakerDAO governance model: migration, involving voting and contract delegation, conditional delegation, and disaster recovery. The proposal claims:
These changes will reduce the aggregate redemption yield attributable to all MKR in circulation, while providing a new source of revenue specific to the MKR deployed. This should increase the effective yield of stkMKR at the expense of unspent MKR.
The proposal is currently under discussion by the Maker community and will move to a more formal vote upon positive feedback.
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At the time of writing, MKR is trading at $182 with a gain of 2.23% on the daily chart.
MKR trends down on the daily chart. Source: MKRUSDT Tradingview