“War On Privacy”: MakerDAO Blocks VPN Users to Cut Off US Residents

MakerDAO bans VPN use to steer clear of legal trouble with the US government, triggering criticism from the crypto community.

VPN ban Spark Protocol Maker DAO

MakerDAO sparked a backlash from the crypto community with its VPN ban. In terms of service for Spark Protocol, its new lending algorithm, the platform makes it clear that it prohibits users from concealing their identity with virtual private networks or other methods. The failure to comply “may result in permanent blocking of use of the site.”

The ban is primarily targeting American residents. Since the US crackdown on Tornado Cash, MakerDAO is wary of sanctions from the Big Brother and wants to keep things clean and tidy without any US-based presence.

Spark Protocol Maker Dao VPN
Source: SparkProtocol.io

According to some voices in the crypto space, such a policy might be overkill, damaging privacy, not to mention cutting the service off from a large demographic. Chris Blec, a crypto influencer with over 50k followers, self-described as a “fierce advocate for immutable, unstoppable decentralized tech,” posted a tweet calling MakerDAO’s restrictions “an actual war on privacy.”

One of Blec’s interlocutors points out that the root cause of the problem is the US government with its “regulation by enforcement” approach. The tweet’s author counters that argument with a claim that MakerDAO puts “profit over principle,” and goes on to suggest the entire project should be shut down, since it’s not decentralized, not censorship-resistant, and not crypto at all, for that matter – and he’s not alone in this opinion, as other comments in the thread suggest.

Launched in May, Spark Protocol is a DeFi lending marketplace designed to boost the liquidity and yield-bearing capabilities of DAI, an Ethereum-based algorithmic stablecoin soft-pegged to the US dollar.

The protocol is part of Endgame, MarkerDAO’s major update aimed at increasing efficiency, resilience, participation, and innovation in the ecosystem through artificial intelligence solutions and open processes. It also intends to promote the growth of SubDAOs, semi-independent, specialized DAOs linked to Maker Governance that limit risk to Maker Core.

The Endgame agenda is divided into five launch phases that include:

- a full rebranding with the rollout of a new unified brand early next year,

- the launch of new versions of Dai and MKR codenamed, respectively, NewStable and NewGovToken,

- the launch of the first 6 Maker SubDAOs and their NewStable token farms,

- the launch of AI tools for governance monitoring and improvement,

- the launch of Sagittarius Lockstake Engine (SLE) for incentivizing NewGovToken holders to participate more extensively in governance,

- and, finally, the deployment of NewChain as the last step in the Endgame launch process, which will mark MakerDAO’s permanent transition to the Endgame State where its core processes and balance of power remain decentralized, self-sustainable, and immutable forever.