MakerDAO Raises DAI Holding Interest Rate to 8%, Spark Protocol Blocks VPN Users

MakerDAO has officially raised the interest rate for holding the stablecoin DAI to 8% through the lending platform Spark Protocol. However, the community has noticed that Spark is blocking users who access it via VPN.

MakerDAO's Interest Rate Increase

As previously reported by Coin68, MakerDAO's plan to increase the DAI interest rate to 8% has been approved. With this increase from 3% to 8%, DAI now offers one of the highest interest rates among stablecoins.

Immediately after the proposal was passed, on-chain data showed that many whales started "hoarding" DAI to deposit into the interest-earning pool.

For regular users, the simplest way to earn the 8% interest is to deposit DAI into Spark Protocol, MakerDAO's "darling" lending protocol, which launched its mainnet in May 2023.

Spark Protocol's VPN Block

However, Spark has taken a rather controversial step by blocking users who access the platform via VPN.

This action has sparked debate within the community. Some sympathize with Spark's intention to block fraudulent users, while others criticize the move, arguing that DeFi should be borderless, decentralized, and accessible to everyone.

Similar criticism arose when Uniswap blocked 253 wallet addresses linked to Tornado Cash.

Spark's Terms and US Regulatory Compliance

Spark's terms of use specify restrictions for US citizens and state that the platform will block those attempting to bypass these restrictions using VPNs. With US regulators scrutinizing lending and staking services, most crypto platforms restrict these services to avoid legal issues, such as Nexo ceasing its lending product or DEX Orca blocking US users.

Despite this, Coin68 notes that even without using a VPN, readers from Vietnam are unable to access the platform.

Market Reaction

Currently, MKR is trading around $1200, down nearly 3% in the last 24 hours.

4H chart of the MKR/USDT pair on Binance as of 02:40 PM on August 07, 2023.