MakerDAO community leader proposes the governance token, MKR, to be replaced

The MakerDAO community leader ‘monet-supply’ on March 14 made a proposal on the MakerDAO forum outlining an alternate token economic mechanism. The proposal seeks to introduce a new token stkMKR to replace the current governance token, MKR.

If the proposal goes through, it shall present a tokenomics shift in MakerDAO.

Immediately the proposal was made, the community erupted and very many responses were made and most of them were in support of the proposal.

Following the development, the proposal will need to be passed as a MIP (Maker Improvement Proposal) for it to be voted by the MKR holders, a process that takes two weeks.

What the proposal seeks to address

The proposal seeks to address several issues affecting the current MakerDAO tokenomics that use the “buyback and burn” mechanism. Monet-supply said that the proposal shall address issues like lack of targeted incentives since all the capital is returned to the MKR holder through the buyback and burn mechanism.

Monet also says that the current system has limited deterrence against governance attacks especially when it comes to voting manipulation.

⚒️ @MonetSupply presented an idea of an alternative token economic mechanism that could supplement the current MKR buyback value accrual system.

stkMKR? Read the entire thread:https://t.co/1hEORZTblu

— Maker (@MakerDAO) March 14, 2022

The proposed solution

Besides an overhaul of the tockenomics mechanism, the ‘monet-supply’ proposal proposes introducing a new token stkMKR to replace the MKR as the governance token of the MakerDAO.

According to the proposal, the stkMKR token shall act as a bonding or staking token and shall be issued to those who deposit MKR for governance purposes only.

A section of the proposal reads:

“stkMKR will be non-transferable and represents MKR staked in governance. Staked tokenholders will receive a share of MKR tokens purchased through surplus auctions, so stkMKR will be backed by an increasing amount of MKR over time.”