Prominent privacy and decentralization advocate, Chris Blec, has voiced strong disapproval of the decision taken by MakerDAO’s decentralized lending platform, Spark Protocol. The platform has implemented restrictions that block US-based users, including those utilizing Virtual Private Networks (VPNs), from accessing its services.
The decision to block VPN users is believed to be part of MakerDAO’s broader strategy to prevent US users from accessing its crypto lending platform. This was outlined in a May 9 update to Spark Protocol’s terms of service.
Blec contended on Twitter that the decision was equivalent to a “war on privacy,” which goes against the spirit of decentralization:
I rarely get as disgusted as I am right now with MakerDAO's Spark Protocol.— Chris Blec (@ChrisBlec) August 6, 2023
It's one thing to block US residents.
It's a whole other thing to block anyone in the entire world who is using a VPN for privacy.
This isn't just govt cuckery.
This is an actual war on privacy. pic.twitter.com/dUbsMeVzbZ
Spark Protocol, introduced in May by Phoenix Labs, a blockchain research and development company founded by the Maker Foundation, offers users annual returns on DAI lending. The platform was created as a soft fork of Aave v3 and utilized TRM’s blockchain intelligence services to block wallets involved in legally dubious activities.
However, the platform’s recent steps to restrict US users have raised several eyebrows. Notably, the protocol’s terms of service page clearly stated that using a VPN to mask a user’s US residence is strictly forbidden and could lead to a permanent ban of the website from that specific blockchain address.
The controversy comes a month after the introduction of the Enhanced Dai Savings Rate (EDSR), a system designed to temporarily boost the DAI Savings Rate (DSR) for users when utilization is low. Maker founder Rune Christensen announced that the DSR temporarily stands at 8% due to lower utilization.
Blec also took a shot at Christensen and the firm’s other developers in a response tweet, stating that they have prioritized profits over user privacy:
The root of the problem here is that these developers are putting profit over principle. They’re putting their bank account balance ahead of your privacy and your rights.
The move has been criticized as a blanket ban on VPNs globally, not just in the US, and has been described as a significant blow to privacy. Some members of the community agreed with Blec that Spark protocol’s decision prioritizes profits over user privacy.