The decentralized finance (DeFi) lending platform Sky has put forward an important governance proposal marking its complete separation from Maker, the platform’s original foundation.
This proposal, shared on May 1 in Sky’s decentralized autonomous organization (DAO) forum, suggests replacing Maker’s MKR token with Sky’s new SKY token as the exclusive governance asset.
Additionally, this change will allow SKY holders to stake their tokens, a feature that many have been waiting for.
Sky Sets Mid-May Timeline for Governance Shift
If the proposal gets approved, the shift is anticipated to happen between May 15 and May 19.
Crucially, users will no longer have the option to revert from SKY back to MKR, indicating a full commitment to this new governance framework.
Rune Christensen, Sky’s co-founder, regarded this proposal as a significant achievement and expressed his enthusiastic support.
He stated that the ability to switch from SKY to MKR has deterred major exchanges from listing the token due to concerns about liquidity fragmentation.
“This change should prompt exchanges to quickly embrace SKY,” stated Christensen.
To incentivize the transition, the proposal includes a delayed upgrade penalty for those MKR holders who are slow to switch to SKY.
Beginning on September 18, a 1% penalty will take effect, increasing every three months. Those affected will also receive fewer SKY tokens in exchange.
One of the key improvements outlined in the proposal is the addition of staking rewards associated with Sky’s decentralized stablecoin, USDS.
These rewards will be disbursed based on the income generated by the protocol, with an initial payout expected two to three weeks following the upgrade.
Christensen mentioned that a revenue split of 50% would be implemented.
“This represents one of the final steps before Sky can eliminate fixed costs by the end of 2025,” Christensen explained.
“This will enable a larger portion of income to support SKY buybacks and staking rewards.”
To avoid potential price manipulation during this initial transition phase, liquidations of SKY will be temporarily halted.
As market liquidity stabilizes, the DAO intends to lift this restriction and realign risk parameters to their long-term goals.
Sky Gains Popularity Among Community
Sky, which rebranded from Maker in August 2024, initially encountered some pushback over the rebranding.
However, a community vote in November showed strong support for the new brand name, with 79% in favor of continuing to use Sky.
The rebranding of Maker to Sky is a crucial part of its “Endgame” upgrade.
This overhaul introduced USDS to replace the DAI stablecoin and SKY as the new governance token, marking the evolution of the protocol.
A primary goal of this rebranding was to improve the decentralization and sustainability of Maker’s governance processes.
Furthermore, the introduction of “Sky Stars” (previously SubDAOs) aims to facilitate independent business models, governance through tokens, and treasury management within the Maker ecosystem.
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