Sky represents a comprehensive rebranding of the well-known decentralized finance platform MakerDAO. Beyond the new name, Sky introduces a fresh stablecoin, USDS (Sky Dollar), and a new governance token, SKY. The platform is scheduled to launch on September 18 and will join a growing number of projects, like Ripple, in offering new stablecoin options to traders.
This article explores what Sky is, its new features, and what the community can expect from this significant transformation.
Key Highlights
- On September 18, Sky (formerly MakerDAO) will launch a new stablecoin, USDS (Sky Dollar), and a governance token, SKY.
- The project has introduced independent decentralized autonomous organizations called Stars, which replace the former SubDAOs.
- Holders of MKR and DAI can choose to upgrade to SKY and USDS, though the future of the original tokens has been a topic of community discussion.
- The Skylink feature will expand Sky's presence across multiple blockchains, increasing token utility and user rewards.
- The Sealed Activation feature offers long-term rewards for locked SKY and MKR tokens with an early exit fee, while Regular Activation provides more flexible staking options.
Understanding Sky's New Governance Model
The shift from MakerDAO to Sky is rooted in the project's Endgame Plan, an initiative designed to enhance the platform's resilience and scalability through a more robust decentralized management structure.
A central change is the introduction of Stars. These are independent decentralized autonomous organizations (DAOs) that operate with their own governance rules, native tokens, and communities. Each Star functions autonomously while remaining connected to the core Sky protocol.
The Spark Protocol, a established decentralized lending platform, will become the first Sky Star. It will operate with a governance framework specifically tailored to its lending products. This new structure raises important questions for existing token holders.
MKR, the original governance token, will be upgradable to the new SKY token. Similarly, the DAI stablecoin can be upgraded to USDS (Sky Dollar). These new tokens are designed to provide additional benefits, such as rewards for holding SKY and participating in governance activities.
It is important to note that due to jurisdictional limitations, some holders may not be able to redeem Sky rewards or participate in the project's early launch programs. The ability to swap MKR and DAI for SKY and USDS may also depend on the user's geographic location.
The Sky team has stated that holders can convert SKY and USDS back to MKR and DAI at any time. The project's founder has emphasized that the upgrade from DAI to USDS is entirely optional and that DAI will remain available within the ecosystem.
A Closer Look at USDS and SKY Tokens
For holders considering the upgrade, here’s what to expect from the new tokens.
USDS (Sky Dollar)
USDS is the new stablecoin designed to succeed DAI within the Sky ecosystem.
- Conversion Options: You can upgrade DAI or convert USDC to USDS at a 1:1 ratio directly on the sky.money website. This swap is completely optional, and you can convert USDS back to DAI if needed.
- Rewards and Benefits: Holders of USDS become eligible for SKY token rewards generated by the protocol. This integrated reward system aims to help users avoid the risks associated with external reward protocols.
- Reward Distribution: The Sky protocol will distribute 600 million in token rewards annually to USDS holders.
While the 600 million token reward pool is significant, the total token supply cap for USDS has not been officially confirmed. The platform will also feature a savings rate function, similar to the long-standing DAI Savings Rate (DSR), which holders can opt into. Despite the optional nature of the upgrade, some community members have expressed concerns about the long-term future of DAI.
SKY Token
SKY is the new governance token at the heart of the rebranded ecosystem, enabling holders to earn rewards and participate in key decision-making.
- Conversion Process: MKR holders have the option to upgrade their tokens to SKY. This process is also reversible, allowing users to convert SKY back to MKR.
- Upgrade Incentive: Those who choose to upgrade will receive 24,000 SKY for every 1 MKR token.
As with USDS, geographic restrictions apply. The upgrade may not be available to holders in certain countries, including those using VPNs to access the service.
What to Expect After the Launch
The full launch on September 18 will activate several new features and programs. Here’s an overview of the planned developments.
Skylink Expansion
Skylink is a framework designed to extend the Sky platform's functionality across multiple blockchains, moving the ecosystem beyond the Ethereum mainnet.
- Launch Timeline: Skylink is scheduled to launch shortly after the Sealed Activation feature goes live. It will connect Sky Ecosystem tokens from Ethereum to major Layer 2 solutions.
Core Features: On every Layer 2 or blockchain where Skylink is deployed, users will have access to:
- USDS stablecoin
- Sky Savings Rate
- Token rewards
- 1:1 conversion between USDC and USDS
- Future Growth: The plan is to continuously deploy Skylink on additional Layer 1 and Layer 2 blockchains over time.
Sealed Activation and Unsealing
Following the launch of USDS and SKY, the Sealed Activation feature will be introduced. This allows MKR and SKY holders to "seal" their tokens by locking them in exchange for rewards, incentivizing long-term participation in governance.
How Sealed Activation Works
- Token Sealing: SKY and MKR tokens can be sealed, making holders eligible for activation rewards.
- Reward Structure: Sealed Activation rewards are distributed in USDS. Holders of sealed MKR and SKY receive 25% of the protocol's stablecoin surplus. After the launch of the Spark Star, users may also choose to receive rewards in SPK tokens, with 15% of SPK tokens reserved for Sealed Activation rewards.
Unsealing Fee Structure
- Exit Fee: To encourage long-term commitment, unsealing SKY or MKR tokens incurs a 5% exit fee, which is burned by the protocol. This fee starts at 5% and increases by 1% every six months over a five-year period, capping at 15%. It's important to note that token rewards earned while sealed are not subject to this fee.
Regular Activation
Shortly after the launch of Sealed Activation and Skylink, Sky will introduce Regular Activation. This feature provides SKY holders with a more flexible way to earn rewards without a long-term commitment or exit fee.
- Flexibility: Holders can activate and deactivate their SKY tokens at any time with no exit fees.
- Rewards: At launch, 15% of the total SPK supply will be distributed as activation rewards to qualified SKY holders.
- Restrictions: Regular Activation will not be available in some countries, including the US and UK, or for users accessing the platform via VPN.
Spotlight on Spark: The First Sky Star
Spark has been designated as the first "Star" within the Sky Ecosystem, a role previously known as a SubDAO.
The launch of Spark introduces its own governance token, SPK, and enables users to access multi-chain SPK token rewards through Skylink.
Token Distribution
- SPK tokens are distributed primarily through Sky Token rewards, which are accessed by holding USDS.
- A smaller portion is allocated to contributing teams to promote a decentralized token distribution.
SparkLend
Spark specializes in delivering DeFi products that leverage the economic scale of the Sky ecosystem. Its flagship product is SparkLend, a modern lending mechanism where users can generate USDS using cryptocurrency as collateral. Since its initial launch, SparkLend has become one of the top 10 DeFi platforms in the world by Total Value Locked (TVL).
- SPK Airdrop: SparkLend users can pre-collect SPK tokens, which will be distributed in a single airdrop at the token's launch.
- Restrictions: The SPK airdrop will be restricted in some countries, including the US and UK, and for users on VPNs.
Allocation System
Spark also operates an allocation system within the Sky protocol. This allows Stars to borrow from Sky at lower rates and strategically allocate capital to top DeFi protocols.
- Currently, Spark manages a Morpho Lending Market, directing funds into assets like Ethena's tokenized perpetual swaps, sUSDe.
- Future plans include the Spark Tokenization Grand Prix, which aims to deploy billions in MakerDAO collateral into high-quality tokenized real-world assets (RWAs).
SPK Tokenomics
After launch, SPK tokens will be available as rewards for qualified USDS users on Ethereum and Layer 2 networks, with minimal transaction fees on Layer 2.
The SPK token reward program will distribute:
- One billion SPK tokens per year for the first two years.
- This issuance rate will halve every two years until 4 billion tokens are distributed over a 10-year period.
Distribution Breakdown:
- 700 million SPK/year for USDS users
- 150 million SPK/year for Activated SKY
- 150 million SPK/year for Sealed SKY or MKR
SPK Activation
From the moment of launch, SPK tokens will include activation rewards. Holders can activate SPK on both Ethereum and Layer 2, earning 80 million SKY per year in SKY activation rewards.
Spark Governance
The Spark community will direct its governance through SPK token voting. Over time, this model is designed to allow Spark to operate autonomously as a fully independent Star within the Sky ecosystem.
👉 Explore advanced DeFi strategies
Frequently Asked Questions
What is Sky and how is it related to MakerDAO?
Sky is the new name for the MakerDAO project. The rebranding is part of a broader initiative called the Endgame Plan, which aims to improve the platform's resilience and scalability. It introduces new tokens, a new governance model, and an expanded multi-chain vision.
What are USDS and SKY tokens?
USDS (Sky Dollar) is the new stablecoin that holders can upgrade to from DAI or USDC at a 1:1 ratio. SKY is the new governance token that replaces MKR. Both tokens are designed to integrate with the new reward and governance systems of the Sky ecosystem.
How can MKR and DAI holders upgrade to SKY and USDS?
Holders can initiate the upgrade process on the sky.money website. The conversion is 1:1 and is designed to be reversible, allowing users to switch back to MKR and DAI if they choose. Availability is subject to geographic restrictions, and the upgrade may not be accessible to users in the US, UK, or those using VPNs.
What are the key governance changes with the new Sky brand?
The most significant change is the introduction of Stars—independent DAOs that replace SubDAOs. Each Star has its own token, governance, and community. The new model also introduces Sealed and Regular Activation for token holders, which are designed to increase participation and incentivize long-term commitment.
Will my existing DAI and MKR become obsolete?
No. The upgrade to USDS and SKY is optional. The project founder has explicitly stated that DAI will continue to exist and function within the ecosystem. Holders can choose to remain with the original tokens.
What is the purpose of Skylink?
Skylink is an infrastructure project that will connect the Sky ecosystem to multiple Layer 1 and Layer 2 blockchains. This expansion is intended to increase the utility and reach of USDS, SKY, and other ecosystem tokens beyond the Ethereum mainnet, offering users lower fees and more flexibility.