Gnosis Chain community members are re-evaluating their gas token options due to MakerDAO’s rebranding to Sky and the introduction of the Sky Dollar (USDS).
Gnosis Chain is a blockchain network, similar to Ethereum, designed for digital transactions and applications. Known for its speed and affordability, it offers users an accessible experience. Initially part of the Gnosis project focused on prediction markets, it has since evolved into a broader blockchain platform.
Gnosis and DAI
Gnosis currently uses xDAI for gas fees, but concerns have arisen regarding USDS’s centralized features, such as the ability to freeze wallets, which contradicts Gnosis’ decentralization principles.
The xDAI token is the native stablecoin of the Gnosis Chain, formerly known as xDai Chain, and it operates within a decentralized framework. Unlike traditional cryptocurrencies that may be owned by a specific entity, xDAI is a derivative of the DAI stablecoin, pegged 1:1 to the US dollar.
DAI is an algorithmic stablecoin issued by MakerDAO, an Ethereum-based decentralized autonomous organization (DAO). It is governed collectively by MKR token holders, who vote on key parameters like stability fees and collateral types to ensure the proper functioning of the DAI system.
Rebranding of MakerDAO
Meanwhile, MakerDAO officially announced its rebranding to “Sky,” with plans to launch two new tokens, the Sky Dollar (USDS) and SKY governance token, on September 18. This rebranding aims to enhance user experience and appeal to a broader audience, addressing challenges faced by the original MakerDAO.
Existing DAI and MKR tokens will remain in circulation, allowing users to upgrade to USDS and SKY voluntarily. The move is part of MakerDAO’s “Endgame” plan, which seeks to improve governance and sustainability within the DeFi ecosystem.
Gnosis to implement a “USDT”?
In response to this change, Gnosis is considering alternatives. A community member, 0xLajota, called for the need to explore options due to certain issues associated with MakerDAOs development.
“With the recent change of MakerDAO to Sky and the migration of the MKR token to SKY and of DAI to USDS, several problems have appeared, notably on the access to the USDS which is banned in the US and UK,” he said.
He revealed that the USDS stablecoin has a feature allowing it to be “frozen,” which means it can be blocked from use by certain wallets or smart contracts. This feature contradicts the core values of Gnosis, which promotes decentralization and unrestricted access.
He added that his two main concerns are that if a wallet is frozen on Ethereum, it might also lose the ability to pay for transactions on Gnosis, making it problematic if that wallet is blacklisted.
Secondly, the ability to freeze USDS conflicts with Gnosis’s philosophy of openness. This raises doubts about whether USDS will still be useful or desirable, especially if it starts to resemble USDT, which also has freezing capabilities.
USDT (Tether) is not a decentralized stablecoin. It operates on a centralized model where Tether Ltd., the company behind USDT, has control over the issuance and management of the token. This means they can freeze or blacklist certain addresses if needed.
In contrast, truly decentralized stablecoins, like DAI from MakerDAO, are managed by decentralized protocols and smart contracts, aiming to minimize central control and restrictions.
Feedback on the best option
While no final decision has been made, a few suggestions have been proposed. Gno-investor responded to the query by outlining four options for the Gnosis chain.
One suggestion is to replace xDai with another decentralized stablecoin such as Rai, Hai, LUSD, crvUSD, or a combination of these currencies. “This benefits decentralized stablecoins by increasing demand for them and theoretically aligns closely with our values,” Gno-investor noted.
Another option is to replace xDai with a centralized stablecoin like USDT. “I find the combination of a decentralized L1 with the largest centralized stablecoin to be interesting, and I believe it’s worth exploring.”
The third and fourth options are to replace xDai with GNO, and ask MarkerDAO to transfer control of DAI to the community. Although this appears to not be technically feasible.
Gno-investor went further to give preference for the first two options saying “With option 2), it’s probably something this community won’t favor, but I believe it has the most potential to drive higher user adoption on the Gnosis Chain.”
However, Gno-investor noted that it’ll “require a native implementation of USDT.” The community member believes that since DAI has currently been operating as a centralized system without any challenge, it’s possible to have the same effect if the centralized approach is implemented.
More comments are still coming up in the community as there’s no formal agreement on what should be the future of the Gnosis chain.
