What is Sky? Exploring the MakerDAO rebrand

Sky is the new name for MakerDAO, a decentralized finance platform. Alongside its rebrand, Sky will be introducing a new stablecoin USDS (Sky Dollar) and a governance token, SKY. The platform is due to launch on September 18, and joins Ripple in presenting traders with a new stablecoin option.

Read on as we explain what Sky is and what to expect from its new brand and offering.

TL;DR

• On September 18, Sky (previously MakerDAO) is launching a new stablecoin, USDS (Sky Dollar), and a governance token, SKY.

• Sky introduced independent decentralized autonomous organizations called Stars, replacing SubDAOs.

• MKR and DAI holders can optionally upgrade to SKY and USDS, but the community has raised questions about MRK and DAI’s future.

• SkyLink will expand Sky across blockchains, improving token utility and rewards.

• Sealed Activation offers long-term rewards for locked SKY and MKR tokens with fees for early exit, while Regular Activation provides flexible participation options.

What are the governance changes in MakerDAO’s SKY rebrand?

MakerDAO is now called Sky, as the team commits to a rebrand and the introduction of new tokens. The goal is to improve the resilience and scalability of the platform. This transformation is built around the Endgame Plan, an initiative to overhaul how decentralization is managed within Sky’s platform.

One noticeable change to the project's governance is the introduction of Stars, which are decentralized autonomous organizations (DAOs) on Sky. These Stars, previously known as SubDAOs, will operate with their own governance, tokens, rules, and communities. This structure allows each Star to operate independently while still being connected to Sky’s protocol.

The Spark Protocol, a decentralized lending platform, will become the first Sky Star, providing a specialized governance framework tailored to its specific lending needs. What does this mean for DAI and MRK token holders? MRK will be upgraded to the SKY governance token. Meanwhile, the DAI stablecoin will 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.

Due to jurisdiction limitations, some holders will be unable to claim Sky rewards or participate in the project's early bird launch program. You also might not be able to swap MRK and DAI for SKY and USDS, depending on your location.

Sky has stated that holders can switch SKY and USDS back to MRK and DAI as they wish. The protocol's founder, Rune Christensen, explained that swapping DAI to USDS is optional, and DAI will still remain available.

What are USDS and SKY Token?

Here’s what DAI holders can expect if they choose to upgrade their DAI for USDS (Sky Dollar).

• Conversion options: You can upgrade to USDS from DAI or convert it from USDC at a 1:1 ratio. This can be done on the sky.money website. Swapping is purely optional, and you can also convert your USDS back to DAI.

• Rewards and benefits: USDC holders are eligible for SKY token rewards, which are built within the SKY protocol. That helps you to avoid external protocols and the risks that come with them.

• Distribution of SKY token rewards: Every year, SKY will distribute 600 million token rewards, which will be spread across USDS holders.

While 600 million token rewards sound great, we currently don’t know what the token will be capped at or if it’s capped at all. And, although the details aren't known, SKY has stated that there will be a savings rate. Holders can opt in, if they choose. This is similar to the DAI Savings Rate (DSR), which holders have had for years.

The community, despite being told that upgrading is optional, have questioned whether DAI will eventually be phased out.

SKY

SKY is the governance token connected to the SKY ecosystem. It will allow you to earn rewards and participate in the platform’s decision making.

• Conversion options: If you’re an MRK holder, you have the option to upgrade your MKR to SKY. If you need to, you can convert your SKY back to MKR.

• Upgrade benefits: If you choose to upgrade, you’ll receive 24,000 SKY for every MKR token.

Depending on your location, you may not be able to participate. Sky has also mentioned this includes participants who use a VPN.

What to expect after the launch

Although changes may be made to the protocol, here's what we know so far about what follows the September 18 launch.

Skylink

Skylink is set to connect the Sky platform across multiple blockchains, expanding the reach of USDS, SKY, and other tokens beyond the Ethereum mainnet.

• Launch timing: Skylink will launch shortly after Sealed Activation, linking Sky Ecosystem tokens from Ethereum to major Layer-2 solutions.

• Core features: On each Layer-2 or blockchain Skylink is deployed to, it’ll offer:

• USDS

• Sky Savings rate

• Token rewards

• 1:1 conversion between USDC and USDS

• Future expansion: Skylink will continue to deploy additional Layer-2s and Layer-1 blockchains over time

Sealed Activation and unsealing

After the launch of USDS, SKY, and token rewards, the Sealed Activation feature will be introduced. This feature allows MKR and SKY holders to "seal" their tokens, locking them behind an exit fee in exchange for rewards, encouraging long-term governance participation.

How Sealed Activation works

• Sealing tokens: Both SKY and MKR can be sealed, making the holders eligible for activation rewards.

• Rewards: Sealed Activation rewards are given in USDS. Sealed MKR and SKY holders receive 25% of the maker protocol’s stablecoin surplus. After the launch of Spark Star, users can also choose to receive SPK tokens, with 15% of SPK tokens earmarked for Activation Rewards.

Exit fee for unsealing

• Fee structure: To incentivize long-term commitment, unsealing sealed SKY or MKR comes with a 5% exit fee, which is burned by the protocol. This fee starts at 5% and will increase by 1% every six months over five years, capping at 15%. Token rewards earned while sealed aren’t affected by this fee.

Regular Activation

Shortly after the launch of Sealed Activation, along with Skylink and Spark, SKY will introduce a new feature called Regular Activation. This allows SKY holders to earn Activation Rewards without the commitment of an exit fee. Unlike Sealed Activation, SKY tokens can be activated and deactivated freely and instantly.

• Flexibility: SKY holders can activate and deactivate their tokens at any time without any exit fee.

• Rewards: At launch, 15% of the total SPK supply will be distributed as Activation Rewards to eligible SKY holders.

• Restrictions: Regular Activation isn’t available in some countries, including the U.S. and UK, and for VPN users.

What’s Spark?

Spark is the first “Star” within the Sky Ecosystem, formally known as SubDAOs.

The launch of Spark introduces the SPK governance token, along with the anticipated multichain SPK Token Rewards through Skylink.

Token distribution

• SPK tokens are mainly distributed through Sky Token rewards and are accessible through USDS.

• A small portion is allocated to contributor teams, promoting a decentralized token distribution.

SparkLend

Spark specializes in delivering DeFi products underpinned by the economic scale of the Sky Ecosystem. That leads us to SparkLend, a modern lending engine where users can self-generate USDS using crypto as collateral. Since its launch, SparkLend has become one of the top 10 DeFi platforms globally by total value locked (TVL).

• SPK airdrop: SparkLend users can pre-farm SPK tokens, which will be distributed in a single airdrop upon SPK’s launch.

• Restrictions: The SPK airdrop is restricted in certain countries, including the U.S. and UK, and for VPN users.

Allocation System

Spark also operates an Allocation System within the Sky protocol. This system allows Stars to borrow from Sky at lower rates and strategically allocate capital to the best DeFi protocols.

• Spark currently manages a Morpho Lending Market, directing funds towards assets like Ethena’s sUSDe tokenized perpetual swaps.

• Future plans include the Spark Tokenization Grand Prix, which aims to deploy billions in MakerDAO collateral into top-tier tokenized real-world assets (RWAs).

SPK tokenomics

Upon launch, SPK tokens will be available as rewards for eligible USDS users on Ethereum and Layer-2 networks, with minimal transaction fees on Layer-2s. The SPK token rewards program will distribute:

• One billion SPK tokens per year for the first two years, halving every two years until 4 billion tokens are distributed over 10 years.

• Distribution rates:

• 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-2s, earning 80 million SKY per year in SKY Activation Rewards.

Spark governance

The community will drive governance of Spark through SPK token voting. Over time, this governance model will enable Spark to operate autonomously within the Sky Star ecosystem.

The final word

The rebrand of MakerDAO to Sky will also bring with it a new offering from the project that presents fresh opportunities for traders and DeFi participants. Meanwhile, with the goal of improving the platform's resilience and scalability, users can expect further updates ahead.

As always, it’s important to keep your DAI and MKR safe from bad actors. And, be sure to follow the official Sky account on X for more updates on the upcoming launch.