MakerDAO’s Spark Protocol faces backlash for banning VPN users globally, raising privacy concerns within the crypto community.
- MakerDAO’s Spark Protocol faces backlash for banning all VPN users, not just US users, to access its lending platform.
- Spark Protocol’s move to enhance Dai Savings Rate with an 8% yield attracted attention as a user transferred 14.3 million DAI to capitalize on the platform’s benefits.
- Reactions from DeFi analyst Chris Blec and the crypto community highlight concerns over privacy and individual rights in the face of the VPN ban.
- The controversy sparks a debate about striking a balance between security and privacy in the evolving crypto landscape.
MakerDAO’s recently launched lending platform, Spark Protocol, is receiving significant backlash due to its decision to ban VPN users on the front end. Originally intended to prevent US-based users from accessing the platform, the ban now applies to all VPN users regardless of their location.
• Spark is connected with Maker’s D3M.
This direct wholesale credit line in DAI injects and automatically balances fresh DAI liquidity into Spark Lend and enables its users to access the best rates in the market.
— Maker (@MakerDAO) May 8, 2023
War on Privacy
In a move to enhance the Dai Savings Rate (DSR), MakerDAO increased the yield on the DAI stablecoin from 3% to 8%. This modification attracted attention when on-chain data revealed a single crypto participant transferring over 14.3 million DAO stablecoin to MakerDAO to take advantage of the 8% yield offered through the Spark lending platform.
While the restriction on US users accessing the platform was expected, what surprised many was the update to the Spark Protocol’s terms and conditions, explicitly warning against the use of VPNs to bypass the ban.
The notification stated:
“Use of the credit protocol functions of the site by persons who are currently or ordinarily located or resident in the United States is strictly prohibited, regardless of the user’s IP address. Utilizing a virtual private network or other method to conceal a user’s United States residence is also strictly prohibited and may result in permanent blocking of the use of the site in connection with blockchain addresses suspected of being tied to a United States residence.”
Spark Protocol was launched in May this year to offer users up to 8% in annual returns by lending DAI. It was created as a soft fork of Aave v3 by Phoenix Labs, a blockchain company rolled out by the Maker Foundation.
DeFi analyst Chris Blec expressed his strong disapproval of the VPN ban, highlighting its global impact beyond just US residents. Blec argued that banning VPNs encroaches on the concept of privacy and undermines individuals’ right to safeguard their personal information. He characterized this move as an active campaign against the fundamental notion of privacy.
The decision by MakerDAO’s Spark Protocol to ban VPN users has created controversy within the crypto community. Privacy advocates are concerned about the encroachment on individual privacy rights, while others question the practicality of enforcing such a ban on a global scale. The debate surrounding the balance between security and privacy in the rapidly evolving crypto landscape continues to unfold.