Maker DAO (MKR) Receives Backlash Due To Potential KYC Future – DAI Becomes Less Attractive
KYC (know-your-customer) is a really sensitive issue in the crypto space, and more entities are implementing the system, leading to huge disappointment among the crypto enthusiasts and traders.
Adding KYC to the onboarding process?
Maker DAO (MKR) is reportedly headed for a future that involves mixing crypto-based finance with traditional trustless assets.
Supporters are not happy about these plans at all, and a recent Reddit talk highlights this.
According to the latest reports from Bitcoinist, it’s possible that Maker will possibly add KYC to the onboarding process.
As we reported this before, KYC requirements are against the very nature of cryptos and defeating the purpose of decentralized finance.
The participation fee is also high which extends the troubles with Maker as well.
It’s also worth noting that Maker uses Ethereum as the chief collateral to produce the DAI stablecoin. This system is really fragile, as ETH is extremely volatile.
Maker has always said that they are a community-voting mechanism, but more and more crypto enthusiasts believe that the organization is about to implement all these changes mentioned above despite the consent of the project’s supporters.
DAI allows permissionless and open finance
The supporters of open finance believe that exposing IDs even for small sums breaks the very purpose of the crypto industry.
“The argument the Foundation’s leadership is making about including non-trustless assets in the MDC basket is that ETH, by itself, can’t grow fast enough to accommodate demand for Dai. Also, because ETH is a volatile asset, Dai will continually have issues keeping its peg,” according to the post on Reddit that debates the issue.
Two main issues involved by a KYC future
The Reddit post addressed two problems that will come with a future that brings KYC.
The first one is the fact that “The Maker system becomes less resilient against attack: It’s not just about resilience, but risk. and this (in my opinion) is a huge risk for the Maker system.”
The second issue that is mentioned is that “KYC requirements are hugely unpopular in some crypto circles,” and “Dai becomes much less attractive as an asset that allows users to (somewhat privately) escape the legacy financial system which is facing huge systemic risks currently (witness the $75 billion US buyout of debt recently, negative interest rates, hyperinflation, currency controls, etc.).”
We suggest that you head over to the original post on Reddit in order to learn more about this issue.
Andreas Townsend Author
I am a technical writer, author and blogger since 2005. An industry watcher that stays on top of the latest features, extremely passionate about finance news and everything related to crypto.