Sky (formerly Maker), the longest-running DeFi lending protocol, is completing the upgrade of its governance token from MKR to SKY. This governance proposal reflects the community’s desire to streamline governance, increase voter participation, and support the ecosystem’s long-term growth and scalability by transferring sole governance authority to the SKY token.
Becoming the unified governance token of the Sky Protocol, SKY inherits the governance functionalities previously held by MKR. Holders of MKR can upgrade their tokens to SKY at a fixed rate of 1 MKR to 24,000 SKY.
As part of the terms of the transition, Sky Ecosystem Governance voted to introduce a Delayed Upgrade Penalty. The penalty reduces the amount of SKY received per MKR upgrade at a rate of 1% and is set to begin on September 18, pending community approval. The penalty will increase by 1% every three months thereafter. The penalty will not apply to anyone upgrading their MKR to SKY before then.
Rune Christensen, co-founder of Sky, said, “The approval of this proposal by the Sky community marks a new era for the Sky Protocol. SKY can now deliver on its full potential as a decentralized governance token, driving greater participation by unlocking staking rewards. It is also another important step by the community towards eliminating fixed costs for the protocol, ensuring that an even greater portion of the income the protocol generates goes back to SKY holders and into the sustainable growth of the ecosystem.”
This transition also activates SKY Staking via the Sky.money web app. In the coming weeks, this will allow SKY token holders who have chosen to stake their tokens to receive USDS reward payouts. Specific rates and terms will be proposed and voted on by Sky Governance.
In addition, to promote market stability during the transition’s initial phase, liquidations on SKY-backed vaults for SKY Stakers are temporarily suspended. Normal risk management operations will resume once sufficient market liquidity has been restored.
Maker rebranded to Sky in September 2024, introducing new protocol features, including the launch of decentralized stablecoin USDS, the upgraded version of DAI, alongside the SKY governance token.
For full details and technical documentation, view the proposal on the Sky Governance Forum.