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Benefits of MakerDAO Newly Launched $5M Legal Defence Fund




The Ethereum-based central banking protocol MakerDAO has launched the creation of a new Special Purpose Fund called the “Legal Defence Fund”, which is a $5 million fund for the overall benefits of MakerDAO participants.

According to the disclosure, the defence fund will serve as a contingency budget of 5 million DAI which will be used to cover legal defence expenses in case of legal or regulatory action against specific participants of MakerDAO.

It is noteworthy that MakerDAO is a decentralized autonomous organization (DAO) issuing DAI as its native token, which is a U.S. dollar-pegged stablecoin. 

The resolution by the MakerDAO governance partly reads:

           “Initially, the coverage will be provided to Recognized Delegates, Core Unit   

            Facilitators, Core Unit permanent contributors, and active MHR holders. The legal  

            action against the beneficiary must be directly related to its activities at MakerDAO.”

Given the foregoing, it is clear that the pool of funds will only be available to a certain category of developers on MakerDAO. Meanwhile, developers have established that such costs are not transferable through traditional insurance. 

More importantly, the MakerDAO Defence Fund will serve as a self–insurance tool for its participants while the pre-existing DAI foundation fund will be deployed in taking action against third parties that infringe on Maker’s intellectual property.


However, the platform maintained that an external technical committee will be saddled with the responsibilities of managing claims and payouts. Although the authority has the exclusive right to approve or reject any payouts. 

MakerDAO Struggles to Regain Top Spot 

While MakerDAO was once touted as the leader in the decentralized finance (DeFi) community, it was recently displaced by the Liquid staking protocol Lido Finance following the overwhelming surge in Ethereum (ETH) staking solutions.

According to a report, Lido now has the highest TVL among other decentralized finance protocols. 

Meanwhile, MakerDAO is not leaving things to chance despite the fact that it has been negatively affected by the poor performance of Ether and Wrapped BTC, thereby recording an 86% drop in its revenue.

More than any other time, it is hoped that the new launching of defence funds will attract more developers and participants to the MakerDAO platform.