Controversy as MakerDAO’s Spark Protocol blocks users with VPNs

August 7, 2023 Coin Telegraph

Chris Blec

Users attempting to access Spark Protocol with a virtual private network will not be able to, sparking criticism from supporters of privacy.

MakerDAO, one of the early pioneers of decentralized finance, has sparked criticism over its decision to block virtual private network (VPN) users from accessing its recently launched lending platform, Spark Protocol.

At the time of writing, VPN users that attempt to access the Spark Protocol website will be met with an error: “Accessing this website via VPN is not allowed.”

*Cointelegraph tested accessing the site with Australian and Singapore-based VPNs and was met with the warning. Source: Spark Protocol*

The measure appears to be linked to Maker’s attempt to restrict United States users from accessing the crypto lending platform, discussed in a May 9 update to Spark Protocol’s terms of service warns against the use of VPNs to circumvent the block.

*Spark Protocol’s terms of service prohibits U.S. users from using a VPN to conceal their U.S. residency. Source: Spark Protocol*

In an Aug. 6 tweet, DeFi analyst Chris Blec was among those saying he was “disgusted” with the decision, highlighting it effectively acts as a blanket ban on VPNs across the globe, not just in the U.S.

“It’s one thing to block US residents. It’s a whole other thing to block anyone in the entire world who is using a VPN for privacy,” said Blec, adding it is an “actual war on privacy.”

https://t.co/jQMBepF1j7
— Chris Blec (@ChrisBlec) August 6, 2023

Blec, a self-proclaimed decentralization and privacy advocate, also took shot at MakerDAO’s creator Rune Christensen and the firm’s other developers in a response tweet, stating that they have prioritized profits over user privacy:

“The root of the problem here is that these developers are putting profit over principle. They’re putting their bank account balance ahead of your privacy and your rights.”

Cointelegraph has reached out to MakerDAO for comment, but did not receive an immediate response.

Launched in May, the Spark Protocol supposedly offers users up to 8% in annual returns by lending DAI. The lending platform was created as a soft fork of Aave v3 by Phoenix Labs, a blockchain research and development firm launched by the Maker Foundation.

*Prior to lending cryptocurrencies in Spark Protocol, users must agree that they are not using a VPN. Source:* *Spark Protocol*

Spark Protocol is said to use TRM’s blockchain intelligence services to block wallets from Spark Protocol that engage in legally prohibited conduct.

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MakerDAO to dissolve Foundation and become truly decentralized again

July 21, 2021 Coin Telegraph

Coin Telegraph

MakerDAO plans to complete its roadmap to decentralized governance with the dissolution of its foundation in the coming months.

Pioneering decentralized finance protocol, MakerDAO, has announced its foundation will formally dissolve in the coming months, marking one of the final milestones in the protocol’s roadmap to decentralized governance.

A July 20 blog post describes Maker’s decentralized autonomous organization, or DAO, as now being “fully self-sufficient” — with its globally distributed community “now responsible for every aspect of the Maker protocol.”

“Complete decentralization of Maker means that future development and operation of the Protocol and the DAO will be determined by thousands or perhaps millions of engaged, enthusiastic community members, all determined to extend the benefits of digital currency to people across the globe.”

The post’s author, Maker Foundation CEO, Rune Christensen recounts highlights from the project’s six-year journey, with Christensen having first revealed his plans in a Reddit post detailing his vision for an Ethereum-back stable token dubbed “eDollar” during March 2015.

The Maker Foundation was created as a non-profit tasked with overseeing the project's development and funding in September 2018, reportedly at the behest of its early investors. While Christensen created the Foundation with the intention of dissolving it within two to three years, the move catalyzed internal tensions between supporters of the Foundation and those who saw the legal entity as at odds with crypto’s fundamentally anarchic ethos.

He describes Maker as having “come a long way in a relatively short period,” transitioning from a pioneering fledgling DAO, into a Foundation, and back to a DAO again.

“While the Foundation played a specific and important role in the further development of the Maker Protocol and the growth of a global team, it was designed to exist only temporarily,” emphasized Christensen.

In May 2017, more than two years after Christensen revealed Maker on Reddit, the protocol conducted a limited release of ProtoSai — the precursor to Maker’s first stablecoin, SAI, or Single-Collateral Dai.

SAI would enjoy a wholesale release in December of 2017 and circulate for nearly two years, with Maker introducing Multi-Collateral Dai (DAI) during November of 2019 — allowing DAI to be minted against a variety of digital assets approved by Maker governance.

While Maker would emerge as a pioneering DeFi protocol perched at the top of the sector’s rankings by total value locked, 2020 was not all smooth sailing for Maker, with users launching a class-action lawsuit against the foundation in the aftermath of “Black Thursday” in March. The incident saw Maker lose roughly $6.64 million DAI to cascading liquidations after the price of Ether crashed 50% over roughly 24 hours.

March 2020 would also see the Maker Foundation transfer the MKR token contract to community governance, marking the beginnings of the project’s journey to reinstating decentralizing governance — with Christensen characterizing the foundation as “completely pointless.”

The protocol would also add support for Circle’s centralized stablecoin USDC that month, inflaming controversy regarding Maker’s support for centralized crypto assets as collateral for its purported decentralized stable token.

In March of this year, “Core Units” were established to coordinate management across the protocol’s various teams and activities. The foundation would also return development funds of 84,000 MKR to the Maker DAO in May, worth nearly $500 million at the time.

According to DeFi Llama, MakerDAO is currently the sixth-ranked decentralized finance protocol with a total value locked of $5.62 billion.

Maker Foundation returns dev fund to DAO amid path to decentralization

May 4, 2021 Coin Telegraph

Coin Telegraph

The Maker Foundation has returned 84,000 MKR to the project’s DAO in a major milestone for the protocol’s road to decentralization.

The MakerDAO Foundation has returned 84,000 MKR tokens from its development fund to MakerDAO’s governance module, marking a milestone in the project’s path to decentralization.

In a May 3 blog post, the foundation notes that “no conditions or expectations” have been placed on MakerDAO regarding the returned tokens, with Maker Governance now having complete control over the tokens.

The announcement states that with the return of the development and the completion of recent technical contributions to Maker’s liquidation engine and its DAO’s core unit framework, the foundation will now focus on working toward its own dissolution to further decentralize the protocol:

“The Foundation now turns inward to focus solely on its dissolution.“

To manage and finance its transition to obsolescence, the Maker Foundation has retained less than one percent of MKR’s supply. The foundation is aiming to have dissolved by December 31, 2021. The foundation will continue publishing progress reports until the dissolution is completed.

On the same day, MakerDAO announced the launch of a governance poll to determine whether to expand the vaults subject to its Liquidations 2.0 Framework. If approved, the updated liquidations engine will be used for Maker’s Uniswap, 0x, Basic Attention Token, Loopring, Compound, Balancer, Kyber Network, Decentraland, Aave, and renBTC vaults.

If the governance poll is passed, an executive vote is expected to complete the upgrades within 30 days of voting.

The updated mechanism seeks to bring greater predictability and stability to liquidations executed by the protocol in a move to safeguard against the aggressive cascading liquidations that resulted in MakerDAO becoming undercollateralized amid the March 2020 “Black Thursday” crash. The project moved to decentralize governance in the weeks following the black swan event.

MakerDAO currently ranks as the third-largest DeFi protocol behind Aave and PancakeSwap with $9.75 billion in total value locked, according to DeFi Llama.

Maker Foundation