Sky Proposes New Token and Staking Upgrade in Final Move Away from Maker

Decentralized finance (DeFi) lending protocol Sky has introduced a pivotal governance proposal that would mark its final departure from Maker, the original foundation of the platform.

The plan, posted on May 1 to Sky’s decentralized autonomous organization (DAO) forum, proposes replacing Maker’s MKR token with Sky’s own SKY token as the sole governance asset.

The move would also enable staking for SKY holders, a long-awaited feature.

Sky Sets Mid-May Timeline for Governance Shift

If approved, the transition is expected to occur between May 15 and May 19.

Importantly, users would no longer be able to downgrade from SKY back to MKR, signaling a full commitment to the new governance structure.

Sky co-founder Rune Christensen hailed the proposal as a “huge milestone” and voiced strong support.

He noted that the ability to revert from SKY to MKR has discouraged major exchanges from listing the token due to liquidity fragmentation concerns.

“With this change, exchanges are likely to move faster in quickly adopting SKY,” Christensen said.

To further encourage the transition, the proposal introduces a delayed upgrade penalty for MKR holders who are slow to migrate to SKY.

Starting September 18, a 1% penalty would apply, increasing every three months. Users affected by the penalty would also receive fewer SKY tokens in exchange.

A new governance proposal has been submitted to finalize the upgrade from MKR to SKY.

It would enable SKY Staking, activating USDS rewards for SKY holders. If approved, this could be one of the final steps toward a transition to zero fixed costs by the end of 2025 directing… pic.twitter.com/aq9zm24b4H

— Sky (@SkyEcosystem) April 30, 2025

One of the core enhancements included in the proposal is the introduction of staking rewards tied to Sky’s decentralized stablecoin, USDS.

These rewards will be distributed based on the income generated by the protocol, with an initial payout expected two to three weeks after the upgrade.

According to Christensen, a 50% revenue splitter rate will apply.

“This is one of the final pieces before Sky can eliminate fixed costs by the end of 2025,” Christensen said.

“That will enable a larger share of income to support SKY buybacks and staking rewards.”

To prevent potential price manipulation during the early stages of the transition, SKY liquidations will be temporarily disabled.

Once market liquidity stabilizes, the DAO plans to lift the freeze and adjust risk parameters to their long-term targets.

Sky Gains Popularity Among Community

Sky, which rebranded from Maker in August 2024, faced early backlash over the change.

However, a community vote in November confirmed support for the new brand, with 79% favoring the continued use of the Sky name.

Maker’s rebrand to Sky is a key component of its “Endgame” upgrade.

The overhaul introduced USDS as a successor to the DAI stablecoin and SKY as a replacement for the MKR governance token, signaling the protocol’s evolution.

A primary goal of the rebrand was to enhance the decentralization and sustainability of Maker’s governance mechanisms.

Additionally, the launch of “Sky Stars” (formerly SubDAOs) aimed to enable independent business models, token-based governance, and treasury management within the Maker ecosystem.