MakerDAO Community put up plan to Replacing MKR Governance Token

Community leader “monet-supply” proposed an alternate token economic mechanism.

Maker Improvement Proposal must be presented for a formal vote by MKR holders.
MakerDAO, the decentralized platform for stablecoins, is considering a significant tokenomics move to replace its governance token, MKR. Community leader “monet-supply” proposed an alternate token economic mechanism on the MakerDAO forum on March 14. stkMKR might replace MKR as the protocol’s governance token if a complete governance vote is successful.

Within a few hours of its posting, the idea received many favorable replies, most of which focused on the technical aspects of the solution. MIP (Maker Improvement Proposal) must be presented for a formal vote by MKR holders, which typically takes two weeks.

Flaws and Inefficiencies
The existing tokenomics paradigm, which uses a “buyback and burn” method, has flaws and inefficiencies that the staking proposal aims to fix. Since buyback and burn restores all money to MKR holders, it was stated by ‘monet-supply’ that there are several issues with the current process.

According to ‘monet-supply’, a “weak crypto narrative” can be overcome, thus improving the protocol. Additionally, the existing method does not provide much protection against assaults on governance or manipulation of votes.

MakerDAO’s fundamental governance token, MKR, would be replaced with a new stkMKR token as the recommended solution. Those that deposit MKR for governance reasons will get a staking or bonding token in return, depending on how they use it.

In order to create the decentralized stablecoin DAI, users may place crypto assets as collateral with MakerDAO. DeFi protocols and liquidity pools may then benefit from this. However, the DAI is burned when the “loan” is repaid, and the collateral is retrieved.