DEFIREGULATION

MakerDAO's lending protocol Spark Protocol prohibits the use of VPNs and US users.

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MakerDAO's proposal to increase the savings rate of Dai to 8% has officially sparked attention. However, some privacy advocates have pointed out that MakerDAO's lending protocol, Spark Protocol, not only prohibits access for US users but also restricts the use of VPNs, resembling a global privacy ban.

Spark Protocol: A New Lending Agreement

The Spark Protocol, a new lending agreement under MakerDAO, was initially proposed by the ecosystem development company Phoenix Labs earlier this year and officially launched on May 9th.

It is a forked version of the lending agreement Aave V3, where users can deposit assets such as ETH, stETH, DAI, and sDAI to obtain loans in DAI.

  • MakerDAO Governance Proposal | Plans to Launch the Lending Market Spark Lend! Forked from Aave v3

  • MakerDAO Introduces Spark, a DAI-Centric Lending Protocol, with Fixed Lending Rates and 1:1 Conversion to USDC

However, recent policy changes by Spark Protocol have sparked privacy controversies.

Does Spark Protocol Prohibit Users from Using VPNs?

According to the Spark Terms of Service, the protocol not only prohibits users from the United States but also strictly prohibits the use of VPNs or any method to hide U.S. residency. It warns that violations may result in a permanent ban on related on-chain addresses.

Spark Terms of Service Explanation

According to Cointelegraph, using VPNs from Australia or Singapore to access the Spark Protocol resulted in the warning shown in the image below.

However, tests have shown that using VPNs across regions can still access the protocol. Spark only restricts users or IPs that are from or connected to the U.S.

Spark Protocol has not tweeted about this issue or provided any explanation, leaving it unclear whether the restriction has been officially lifted. The move by Spark to restrict VPNs has sparked privacy controversies among some users.

Spark's VPN Prohibition Warning

Is DeFi Compliance with Regulations Becoming the Norm?

On August 7th, MakerDAO officially approved a proposal to increase the Dai savings rate to 8%. Founder Rune Christensen tweeted that the high rate is due to the low number of people holding Dai through savings contracts, and that with the 8% incentive, the rate will decrease once a certain number of users are reached.

He also mentioned that users interested in the high rate can access it through Spark Protocol, and similarly stated that U.S. and VPN users are not allowed to use it.

In reality, the reaction to the "VPN ban" was not significant, with more interest focused on the 8% interest rate. It appears that DeFi compliance with regulations has become the norm.

However, privacy advocate Chris Blec, with over fifty thousand Twitter followers, continues to criticize this policy, stating that Spark not only prohibits U.S. users from accessing the protocol but that the ban on VPNs seems more like a global restriction.