- Sky’s USDS stablecoin includes a freeze capability, raising concerns about decentralization.
- Rune Christensen, Sky’s co-founder, says the freeze capability will not be active at launch.
- Sky’s website is blocking VPN access, intensifying criticism following the rebrand.
One day after the decentralized finance (DeFi) project Maker rebranded as Sky, the new protocol faces scrutiny over a freeze capability built into its upgraded stablecoin, USDS. Critics warn that a freeze mechanism — which would allow an issuer to halt transactions under certain conditions — could weaken the project’s commitment to decentralization. The reaction has been strong, in part because of the recent rebrand and contentious changes to the project’s website. Co-founder Rune Christensen has responded to these concerns to clarify the project’s position.
Decentralization concerns after Maker’s transformation to Sky
Some community members argue that a freeze capability contradicts the core principles of decentralization. Users on social platforms have voiced fears that such a feature could undermine the project’s purpose by enabling centralized control over token transfers. The possibility that transactions could be interrupted in certain scenarios has led many to question how well this design aligns with decentralized ideals.
Sky co-founder addresses freeze capability concerns
Rune Christensen responded to criticism in a post on X, stating that the freeze capability will not be active when USDS launches. Instead, the stablecoin will initially include an upgrade mechanism that would allow future governance to decide whether and how to implement a freeze feature. Christensen emphasized that any such decision would be made carefully, weighing risk factors and the need to preserve system integrity.
Actually there will be no freeze function at launch, there will just be an upgrade ability. So later governance can decide how to implement something like a freeze function based on considering all data and find something that protects against as many risk factors as possible
— Rune (@RuneKek) August 27, 2024
Christensen also noted that if a freeze capability were ever activated, it would operate within the legal frameworks of the jurisdictions where Sky does business. The intent is to provide greater legal certainty for the real-world asset (RWA) guarantees backing USDS. Supporters of this approach, such as Adam Cochran of Cinneamhain Ventures, argue that a freeze mechanism may be necessary to secure backing with U.S. Treasury bills and to integrate with traditional financial systems.
The reality is, if you want T-bill yield backing, even by secondary treasury deals, you’re going to have a freeze function, and a VPN jurisdiction blocker.
A trade off this industry needs to decide on, because you can’t reap the benefits of the US tradfi system without its rule… https://t.co/oeLWJmmuAZ
— Adam Cochran (adamscochran.eth) (@adamscochran) August 27, 2024
Sky website blocks VPN access
In addition to debate about the freeze capability, Sky’s rebrand and the transformation of Dai into USDS drew criticism after the project’s website began blocking VPN access. That move has added to community unease about centralization and access restrictions. Christensen has reassured users that the original Dai stablecoin remains unchanged and available, and that USDS’s freeze capability is part of Sky’s broader “Endgame” roadmap rather than an immediate operational feature.