Originally published on: December 06, 2024
Sky, formerly known as MakerDAO, is under the spotlight due to concerns surrounding its management of $756 million in USD Coin reserves using an externally owned account (EOA) within its lite peg stability module (PSM).
Recently rebranded as Sky, the protocol is facing scrutiny over the use of an EOA to oversee a substantial amount of its reserves, sparking worries about vulnerabilities to exploits or insider misuse.
With the lite PSM designed to help Sky maintain the stablecoin’s peg to the USD, users are anxious about the security of their funds controlled by an EOA, as indicated by a recent post.
Rune Christensen, co-founder of Sky, clarified that the private keys necessary to access the reserves were destroyed during the setup with Coinbase Custody, aiming to address concerns about potential security breaches.
Despite the reassurance, questions remain about the transparency and control of the funds, leading to speculations about the custodianship model’s effectiveness in safeguarding the $756 million reserve.
Stay updated on the latest developments in the crypto world. Subscribe to our newsletter for exclusive insights and analysis on crypto laws and guidelines to make informed decisions for your investments.