MakerDAO Plans for 1 MKR Token Conversion into 24,000 NGT Tokens

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MakerDAO Plans for 1 MKR Token Conversion into 24,000 NGT Tokens

MakerDAO, the Decentralized Autonomous Organization behind Dai (DAI), is considering a proposal to convert each MKR governance token into 24,000 NewGovToken (NGT). This optional redenomination of the MKR token is part of the protocol’s strategic endgame plan, which it plans to announce in a few months.

By allowing more users to hold significant amounts of the new governance NGT token, MakerDAO plans to foster broader participation in the platform’s governance. In the long run, this will help democratize the decision-making process in the DAO.

Besides introducing the new governance token, MakerDAO plans to debut a new stablecoin dubbed NewStable (NST). Notably, NST will be pegged 1:1 with the DAI stablecoin. Based on the current design, users are not compelled to adopt either the NST or the NGT token. They do not have to upgrade if they do not want to, as the proposal emphasized the subject of choice.

DAI will remain available indefinitely. Users can upgrade to NewStable, with the option to revert back to DAI anytime.

1 DAI = 1 NewStable (NST)

The ecosystem will eventually explore ways to differentiate DAI and NewStable, with DAI focusing on crypto-native use cases and…

— Maker (@MakerDAO) August 22, 2024

Both DAI and MKR will remain active, allowing users to choose whatever token they want, whether the original ones or their new counterparts. This will remain so until the MakerDAO governance says otherwise. More interestingly, users who convert their MKR to NewGovToken can revert to their original tokens later.

Ultimately, MakerDAO’s goal is to maintain flexibility within its ecosystem. In the future, the DAO will explore strategies to create a clear distinction between DAI and NST. The former will likely continue as a token primarily for crypto-based use cases. On the other hand, the new stablecoin could target mass adoption.

Generally, MakerDAO is known for making its governance a top priority in decision-making. The news of these token conversions comes only a few days after MakerDAO’s governance made a bold decision to modify the terms of using Wrapped Bitcoin (wBTC) as security for new loans.

This will stop any further borrowing using wBTC and also reflects growing worries about the management and security of this virtual asset.

Meanwhile, Rune Christensen, CEO and co-founder of MakerDAO, announced in May on X that a new token will emerge to replace DAI. He called it PureDai, aimed at making the ecosystem more decentralized, unlike DAI, which is generally considered centralized. At the time, Christensen noted that the upcoming stablecoin would use decentralized collateral assets like Ethereum (ETH) and staked Ether (stETH).

Unlike the NewStable token, which would require an intentional upgrade, PureDai will not, and once the upgrade is made, it remains unchangeable.

“After multiple years, it is expected that Dai will be fully deprecated as all users and integrations migrate to either NewStable or PureDai. The timeline for when this happens will depend on how quickly the ecosystem adopts NewStable and PureDai,” MakerDAO CEO explained.next

MakerDAO Plans for 1 MKR Token Conversion into 24,000 NGT Tokens