MakerDAO, the veteran DeFi lending protocol, has consistently ranked among the top three lending platforms by total value locked (TVL). Despite its large user base, MKR's conservative and thin tokenomics have limited its value growth potential. Today (15th), the protocol's risk team proposed a new governance token (stkMKR) to address these challenges.
Maker Staking and Tokenomics Revision Proposal
Inspired by Cosmos' governance model, stkAAVE, and xSUSHI tokens, MakerDAO's new Tokenomics Revision Proposal introduces stkMKR—a non-transferable token obtained by staking MKR. This token will replace MKR as MakerDAO's core governance instrument.
Key Features of stkMKR
- Governance Power: Holders gain voting rights and a share of MKR from surplus auctions (previously all auctioned MKR was burned).
- Compounding Returns: Similar to xSUSHI, stkMKR automatically accrues rewards, allowing holders to redeem more MKR over time.
Lock-up Period: Redemptions require a waiting period (like stkAAVE), enhancing protocol stability and security. During this time:
- stkMKR is burned.
- Corresponding MKR is held in escrow, forfeiting rewards and voting rights.
- After unlocking, users reclaim liquid MKR.
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Expected stkMKR Returns
Proposer monet-supply projects:
- 50% MKR staked: ~3.25% APY (30% surplus MKR allocated to stakers).
- 20% MKR staked (current governance participation rate): ~5.5% APY.
This mechanism aims to:
- Boost community engagement.
- Improve governance security by preventing quick exits after malicious votes.
FAQ Section
1. How does stkMKR differ from MKR?
stkMKR is non-transferable and earns rewards through surplus auctions, whereas MKR remains tradable but lacks incentives.
2. What risks does staking MKR carry?
Lock-up periods mean stakers cannot immediately liquidate during market downturns, potentially exacerbating losses.
3. How is stkMKR's APY calculated?
It depends on the percentage of MKR staked and surplus auction allocations—higher staking rates dilute individual rewards.
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Conclusion
The proposal marks a pivotal shift for MakerDAO, addressing longstanding tokenomics weaknesses. By aligning incentives with governance participation, it could reinvigorate this DeFi cornerstone—pending community approval of its risk parameters.
Disclaimer: Cryptocurrency investments involve high risk. Prices are volatile, and capital loss is possible. Assess risks carefully.
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