Sky is moving to solidify its departure from the Maker brand with a sweeping upgrade proposal that would officially replace its existing governance structure and introduce staking rewards.
The proposal, posted to the platform’s decentralized autonomous organization (DAO) forum on May 1, seeks to replace the longstanding Maker (MKR) token with Sky (SKY) as the protocol’s sole governance token. If the DAO approves, the transition will occur between May 15 and May 19. As part of the overhaul, reverse conversions from SKY back to MKR would be permanently disabled.
Sky co-founder Rune Christensen hailed the move as a major milestone in the protocol’s evolution. He noted that maintaining a two-way token upgrade path has deterred centralized exchanges from fully embracing SKY due to concerns over fragmented liquidity.
“With this change, exchanges are likely to move faster in quickly adopting SKY without concerns about fracturing liquidity,”
Christensen wrote in response to the proposal.
To encourage timely adoption, the Sky team has proposed a delayed upgrade penalty for users who lag in converting MKR to SKY. Starting September 18, a 1% penalty would be applied to such delayed transitions, increasing quarterly. As a result, affected users would receive fewer SKY tokens.
The transition will activate staking capabilities for SKY holders, unlocking rewards for Sky’s decentralized stablecoin, USDS. These rewards will come from protocol income and will be distributed at a 50% rate within two to three weeks after the new governance contract goes live. SKY liquidations will be temporarily suspended to mitigate risks during the transition and prevent potential price manipulation. Sky Governance plans to restore normal risk parameters once market liquidity stabilizes.
Sky’s rebrand from Maker in August 2024 was initially met with confusion, prompting Christensen to consider reverting to the original name. However, a DAO vote in November saw 79% of token holders back, keeping “Sky” as the official back-end protocol identity, cementing the project’s new direction.
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