Decentralized finance (DeFi) platform Sky is making significant changes with a new governance proposal that would solidify its departure from Maker, the original foundation of the protocol. The proposal, posted on the Sky DAO forum on May 1, suggests replacing Maker’s MKR token with Sky’s own SKY token as the sole governance asset. This move would also introduce staking for SKY holders, a feature that has been eagerly awaited.
If approved, the transition is set to take place between May 15 and May 19. Users will no longer have the option to switch back from SKY to MKR, indicating a full commitment to the new governance structure. Sky co-founder Rune Christensen praised the proposal as a “huge milestone” and expressed strong support for the change. He highlighted that the ability to revert from SKY to MKR has hindered major exchanges from listing the token due to concerns about liquidity fragmentation.
To facilitate the transition, the proposal includes a delayed upgrade penalty for MKR holders who are slow to migrate to SKY. Starting on September 18, a 1% penalty will be imposed, increasing every three months. Additionally, affected users will receive fewer SKY tokens in exchange. One of the key features of the proposal is the introduction of staking rewards tied to Sky’s decentralized stablecoin, USDS. These rewards will be distributed based on the protocol’s income, with an initial payout expected within two to three weeks after the upgrade. Christensen mentioned that a 50% revenue splitter rate will apply, allowing a larger share of income to support SKY buybacks and staking rewards.
To prevent potential price manipulation during the transition, SKY liquidations will be temporarily disabled until market liquidity stabilizes. Once the freeze is lifted, the DAO plans to adjust risk parameters to their long-term targets. Sky, formerly known as Maker, underwent rebranding in August 2024, which initially faced backlash from the community. However, a vote in November showed that 79% of the community supported the new brand, signaling a positive response to the changes. The rebrand to Sky is part of the “Endgame” upgrade, which introduced USDS as a successor to the DAI stablecoin and SKY as a replacement for the MKR governance token. The goal of the rebrand was to enhance decentralization and sustainability within the governance mechanisms of the protocol.
The launch of “Sky Stars” (formerly SubDAOs) aimed to enable independent business models, token-based governance, and treasury management within the Maker ecosystem. Overall, the proposed changes by Sky mark a significant step towards a more robust and efficient governance structure, setting the stage for continued growth and development within the DeFi space.