MakerDAO to Offer Optional MKR Conversions for New Governance Token

MakerDAO hopes the new governance token will increase governance participation.

Crypto lending platform MakerDAO, the protocol behind the DAI stablecoin, will introduce a new governance token called NewGovToken (NGT).

Announced on Friday, MKR holders will be able to convert their tokens to NGT tokens at a rate of one MKR for 24,000 NGT. The move is intended to increase participation in MakerDAO's governance system.

"The goal of this conversion is to improve participation in MakerDAO governance by increasing the quantity of governance tokens that users hold, which should make it easier for them to participate in governance," the announcement reads.

Currently, MKR's limited supply and high nominal value make it difficult to achieve broad participation in governance votes, according to MakerDAO. For example, to participate in a governance vote, users need to hold at least 100,000 MKR, which is currently worth over $200 million.

"This renders participation in governance economically unfeasible for the vast majority of MKR holders and limits participation to a select group of large holders," the announcement adds.

To address this issue, MakerDAO will be rolling out a new stablecoin called NewStable (NST), which will be pegged 1:1 with DAI. Both DAI and MKR will continue to be available, and the conversion to NGT is optional.

"Both tokens are expected to stay unchanged for the foreseeable future, unless governance decides otherwise," MakerDAO wrote on X.

The new tokens are part of MakerDAO's "endgame" plan, which is a proposed expansion of the Maker ecosystem. This includes launching new stablecoins and new ways to generate revenue, which were announced earlier this year.

The MakerDAO community has been discussing a new governance token since at least 2021, with a proposal being put forward in March of that year. The proposal suggested that a new token be created to improve governance participation and liquidity.

Edited by Oliver Knight

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