Maker (Now Sky) Proposed a Token Freezing Function, Sparking Controversy in the Community

Co-founder Rune Christensen made a proposal to introduce a token freezing function to the USDS (DAI) stablecoin. The function would allow the project to lock tokens on the blockchain in an address that cannot be used.

Maker (now Sky) is a DAO, and as such, any proposals to modify the protocol must be approved by the community before coming into effect.

In a recent proposal, Christensen suggested introducing a token freezing function, which would allow USDS (DAI) to be frozen if necessary.

However, this feature would be much more decentralized than the freezing available on centralized stablecoins, and it would have a decentralized appeal process, similar to that of a court.

According to Christensen, this proposal has been fiercely criticized because it lends itself to real political actions against someone, which is absurd to imagine within a decentralized system.

However, it could be useful, for example, to prevent criminals from using stolen funds.

Christensen also pointed out that, unlike centralized projects, a truly decentralized decision-making process that led to the freezing of tokens would be at least public and transparent.

For example, a user who sees their USDS frozen could leverage the power of decentralized governance to verify that the decision was the result of a fair process.

This process, according to Christensen, should go through decentralized governance to obtain a transparent reason on why the funds were frozen.

His idea is that the decentralized protocol of Sky can make objective decisions on objective matters, simply by using fixed and public rules.