MakerDAO's sudden emergency governance proposal: The loan limit and mortgage rate are flying together. Is it a defense OR power struggle?

MakerDAO Emergency Governance Proposal: Defense or Power Fight?

Original title: "Out-of-Schedule Executive Proposal for Community Security"

MakerDAO recently launched an emergency governance proposal, which quickly entered the voting and passed without notice (currently in the time lock stage). The proposal significantly increased the MKR token lending ceiling, while significantly lowering the collateral rate, triggering strong doubts from the community about governance transparency and fairness. : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : :

These adjustments actually relax the borrowing amount of MKR tokens as collateral (more than twice before) and allow for higher leverage (the collateral rate drops from 200% to 125%). Meanwhile, liquidation fines have been reduced to 0%, significantly reducing liquidation costs.

Official explanation: Where is the evidence to prevent and control attacks?

The initiator of the proposal and some official channels attribute the urgency of the proposal to "prevent potential governance attacks." However, community members, including PaperImperium, noted that no known, ongoing specific attacks have been found. Whether the proposal can effectively resist so-called "governance attacks" and whether there are other motives remains controversial.

• Questioners were banned
What is more controversial is that during the voting, many users and institutions (such as GFX Labs) who have oppose or question their opinions were banned or banned in official channels such as Discord and forums. PaperImperium said that its personal Discord account and GFX Labs forum account were also banned, and the doubts were once suppressed.
• Multi-sided perspectives: beneficiaries and doubters
• Short-term beneficiaries: high leverage and high liquidity
Big owners or institutions:
• It is easier to borrow more USDS from the Maker agreement and obtain higher leverage with less capital.
High-risk speculators:
• Lower liquidation fines and higher leverage space provide more operational space.

Long-term risks: potential impacts of governance and financial security

• Governance concentration and transparency: Fast adoption of proposals in the absence of clear evidence of attacks has triggered doubts about the abuse of power among minority interest groups.
• Systemic risks increase: Significantly lowering the liquidation ratio and increasing the debt ceiling may lead to a chain reaction under high leverage when market fluctuates.
• Community trust is shaken: skeptics are banned and lack of sufficient argumentation for emergency measures, which damages MakerDAO's reputation for decentralized governance.

The various motivations behind emergency proposals

PaperImperium pointed out that some MKR holders are dissatisfied with MakerDAO's development direction, source of profits and community governance methods, and call for reform. The proposal may be related to these internal demands.

• Internal reform demands: Against the backdrop of "sluggish growth and declining profits", some MKR holders hope to improve the efficiency of capital utilization.
• Govern factional disputes: Different interest groups have different demands at the governance level. Using emergency proposals to promote certain changes may be a means to compete for the direction of the agreement.
• External defense or internal operation:The saying of "governance attack" is common in the DeFi circle, but actual operation requires clear on-chain evidence; this time, there is a lack of conclusive evidence, which arouses vigilance against "internal manipulation".

Future Outlook: MakerDAO Challenge

The impact of this emergency governance proposal is far more than the parameter adjustment itself, but more importantly, the questioning of the decentralized governance model. The community is concerned about the following issues:

1. Improvement of governance processes:How to ensure that major proposals follow a more transparent and democratic process?
2. Information Disclosure and Supervision: Can a reasonable statement be given to the disclosure of specific details of "potential attacks" and the explanation and handling of banned users?
3. Balance of decentralization and efficiency:How to find a balance between the inefficiency of decentralized governance and the abuse of power in centralized decision-making?

Conclusion: Transparent governance, return to community consensus

The "Emergency Governance Proposal" highlights the most important issue in the DeFi ecosystem: Can the governance mechanism stand the test when pressure arises? As a pioneer in the DeFi field, MakerDAO has a warning to the entire industry. Lack of transparent governance processes and publicly verifiable evidence of attacks, "emergency" may become a tool of power for a few. Only by ensuring smooth community dialogue channels and establishing a complete governance mechanism can MakerDAO be ensured to the healthy and sustainable development of MakerDAO.

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