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Holders of MakerDAO’s decentralized stablecoin DAI can now get as much as 8% annual percentage yields. However, a decision has been made at the protocol level to block users of virtual private networks sparking uproar from privacy advocates.
On Aug. 6, MakerDAO founder Rune Christensen announced that the Dai Savings Rate (DSR) was paying out 8% “at no additional risk compared to holding Dai.”
No DSR For Americans
The DSR was launched in 2018 to help balance the supply and demand of Dai. However, it has been close to zero for several years during the crypto bear markets.
Christensen explained that rate was so high because not many people use it. Only about 8% of Dai holders use DSR currently, he added.
“This causes the Enhanced DSR system to increase the rate to attract more users. Once more users arrive, the rate will go back down.”
The high-interest rate is good news for Dai holders, but there are some major catches.
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MakerDAO launched an Aave competitor called Spark Protocol in February. The DeFi platform leverages Dai liquidity and supports a range of crypto collateral.
However, according to Rune, it is not available for those based in the United States. This is presumably due to the regulatory uncertainty and avalanche of crypto litigation in America this year.
No VPNs on Spark Protocol
Moreover, Spark Protocol also doesn’t work for those using VPNs, as confirmed by this writer who tested it and got this message:
This has been implemented to prevent US users from masking their internet addresses and locations. However, it impacts all VPN users across the globe.
The move has caused an uproar among privacy and decentralization advocates such as Chris Blec, who wrote:
“I rarely get as disgusted as I am right now with MakerDAO’s Spark Protocol. It’s one thing to block US residents. It’s a whole other thing to block anyone in the entire world who is using a VPN for privacy.”
“This isn’t just govt cuckery. This is an actual war on privacy,” he added.
When asked about a potential solution, Blec said he would “shut down the entire project. It’s not decentralized, it’s not censorship-resistant, it’s not crypto.”
The platform has been investing heavily in traditional finance assets this year as part of its ‘Endgame Plan.’
MakerDAO’s native token MKR has fallen 2.45% on the day to trade at $1,218 at the time of writing.
Moreover, the move may be a reaction to the VPN blockade since the broader market remains unmoved.