MakerDAO's new proposal introduces MKR staking functionality, launches stkMKR token, and adds incentive measures.

The veteran DeFi lending protocol MakerDAO has consistently ranked among the top three in terms of locked value since its launch. Despite its large user base, its conservative approach and limited token economy have been unable to further boost the value of MKR. On the 15th of this month, its risk management team proposed a new governance token, stkMKR, in hopes of improving the current situation.

Maker Collateral and Token Revision Proposal

MakerDAO's new tokenomics proposal is inspired by the governance style of Cosmos, stkAAVE, and xSUSHI tokens. It introduces a new token called stkMKR to replace MKR as the core governance token for MakerDAO.

stkMKR is obtained through MKR collateral but is non-transferable. Holders gain voting weight and share part of the MKR obtained through Surplus Auctions, with all MKR obtained from surplus auctions being burned. This distribution follows an automatic compounding model similar to xSUSHI, allowing stkMKR to convert back to more MKR over time.

However, redeeming MKR has restrictions and requires a certain unlocking period, similar to stkAAVE, to enhance protocol stability and security. During the unlocking period, all stkMKR is burned, corresponding MKR is held in custody, and no longer earns rewards or possesses voting rights. After the unlocking period, users can reclaim the MKR from custody to regain liquidity.

Expected Return of stkMKR

According to the proposer monet-supply's calculations, assuming 30% of the MKR obtained through surplus auctions is distributed to stkMKR holders, the total yield of stkMKR is approximately 3.25% when 50% of MKR is staked, and close to 5.5% when 20% is staked, nearing the current governance participation rate.

The introduction of this new mechanism aims to provide the incentives MakerDAO currently lacks, with the goal of increasing community engagement. The introduction of the collateral unlocking period also enhances governance security, guarding against governance attacks where current MKR holders could withdraw funds immediately after voting malicious proposals to avoid penalties. The community is currently discussing the risks and details of this proposal, looking forward to bringing some new dynamics to this leading DeFi protocol in the coming months.