Digital CurrencyMakerDAO's New Stablecoin USDS Sparks Debate Over Decentralization

MakerDAO’s New Stablecoin USDS Sparks Debate Over Decentralization

MakerDAO, now rebranded as Sky, has unveiled a new version of its $5 billion stablecoin, DAI, named USDS. However, the introduction of USDS has stirred controversy among crypto enthusiasts.

The new stablecoin includes a feature allowing the issuer to remotely freeze the asset—a capability already present in centralized stablecoins like Circle’s USDC and Tether’s USDT. These centralized tokens can freeze assets linked to illegal activities, as demonstrated by Tether’s recent cooperation with the U.S. Department of Justice in seizing $5 million of USDT tied to fraud.

This feature has raised concerns among DeFi supporters, as it contradicts the decentralized principles that MakerDAO originally championed.

Rune Christensen, co-founder of MakerDAO, confirmed the inclusion of the freeze function but emphasized that it is an optional feature and will not be activated when USDS launches next month. He assured that “Dai is an immutable smart contract and cannot be altered,” and noted that “upgrading to USDS is optional, with only USDS featuring the freeze function.”

AJ Scolaro, a senior analyst at crypto research firm Messari, downplayed the concerns, stating that the freeze function was previously disclosed and is essential for a stablecoin partially backed by U.S. Treasuries to achieve broad adoption. Scolaro described the current unease as unfounded, arguing that a major decentralized stablecoin must balance user governance with compliance to legal systems. He also mentioned Christensen’s plans for a fully crypto-backed stablecoin, PureDAI, as an alternative for skeptics.

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Andrew
Andrew
Self-taught investor with over 5 years of financial trading experience Author of numerous articles for hedge funds with over $5 billion in cumulative AUM and Worked with several global financial institutions. After finding success using his financial acumen to build an investment portfolio, Andrew began writing and editing articles about the cryptocurrency space for sites such as chaincryptocoins.com, ensuring readers were kept up to date on hot topics such as Bitcoin and The latest news on digital currencies and Ethereum.

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