Sky (formerly Maker) Completes 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

DeFi lending protocol Sky (formerly Maker) is completing the upgrade of its governance token from MKR to SKY.

The governance proposal, which was approved by the community to streamline governance, increase voter participation and support the ecosystem’s long-term growth and scalability, transfers 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. Commencing on August 28, 2024, at a fixed ratio of 1 MKR to 24,000 SKY, MKR holders can upgrade their tokens to SKY.

As part of the terms of the transition, which are subject to change by the community, the installment of a Delayed Upgrade Penalty was voted for by the Sky Ecosystem Governance to decrease the amount of SKY that can be claimed in exchange for MKR at a rate of 1% to begin on September 18, pending community approval. The penalty will increase by 1% every three months. The penalty will not apply to anyone upgrading their MKR to SKY.

"The approval of this proposal by the Sky community marks a new era for the Sky Protocol, where 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," said Rune Christensen, co-founder of Sky.

This transition also activates SKY Staking via the Sky.money web app, enabling SKY token holders who have elected to stake their tokens to begin receiving USDS reward payouts in the coming weeks, with specific rates and terms to be proposed and voted on by Sky Governance.

Moreover, to foster market stability during the transition's initial phase, liquidation operations on SKY-backed vaults for SKY Stakers are being suspended. Normal risk management procedures will recommence once sufficient market liquidity has been restored.

Sky, which announced its rebranding from Maker in September, is launching a decentralized stablecoin called USDS, an upgraded version of DAI, alongside the SKY governance token.