Sky’s USDS stablecoin has been heavily criticized for its “freezing function”

Author: Martin Young, CoinTelegraph; Compiler: Wuzhu, Golden Finance

Decentralized finance project Maker has changed its name to Sky, and its recently upgraded stablecoin has been strongly opposed, with observers noting that it will have a so-called "freeze function."

Some online observers have pointed out that Maker's new stablecoin USDS will allegedly have a function that allows its issuer to freeze tokens, adding that this may call into question the decentralization of the protocol.

"Doesn't this completely defeat the purpose of the project? Am I missing something?" Monad marketer "Tunez" asked his 155,000 X followers on August 28.

In an August 27 X post, protocol co-founder Rune Christensen clarified that there would be no freeze feature at launch, only an upgrade feature, adding:

“So governance can decide later on how to implement something like a freeze feature based on taking all the data into account and finding ways to protect against risk factors as much as possible.”

In a May forum post explaining Maker’s upcoming new token, he said that once activated, the freeze feature is generally expected to “follow the rule of law in jurisdictions where Maker needs a high degree of certainty that the legal system will enforce recourse on RWA [real-world asset] collateral.”

Adam Cochran, partner at Cinneamhain Ventures Commenting, this is necessary to back the new stablecoin with U.S. Treasuries.

“The reality is that if you want Treasury yield backing, even through secondary Treasuries trading, you need freeze functionality and VPN jurisdiction blockers.”

Maker rebranded to Sky this week, while also renaming its DAI stablecoin USDS. The project’s website blocks access via VPNs, sparking further derision from the DeFi community.

Cochran added that freeze functionality and VPN blocking are “trade-offs that the industry needs to decide on.”

“You can’t have the benefits of the U.S. TradFi system without rules.”

Christensen said a post claiming Sam MacPherson, CEO of Phoenix Labs and Spark Protocol, said the new Dai would have a freeze functionality was misleading.

“Dai will continue to operate as before and will still be usable,” he wrote. “Upgrading to USDS is optional, only USDS has the freeze feature. Dai is an immutable smart contract and cannot be changed.” Source: Rune Christensen Centralized stablecoins such as Tether also have the ability to be frozen by the issuer, as the company froze $5.2 million worth of tokens in May due to a phishing scam.

It now appears that Maker took this route to achieve its "end game" roadmap, which involves backing stablecoins with real-world assets and expanding the supply to compete with Tether.