Sky Protocol Officially Transitions from MakerDAO, Introducing a New Token That Will Act as the “Exclusive Governance Asset”

An important shift is taking place in the decentralized finance space. Sky Protocol, which used to be known as MakerDAO, is rebranding and moving

In a significant development within the decentralized finance space, Sky Protocol, formerly known as MakerDAO, is undergoing a substantial rebranding and introducing a new token that will serve as the "exclusive governance asset" for its ecosystem.

This shift is part of a broader initiative by the Shapeshift Foundation to spearhead the creation of next-generation DeFi protocols, which are being designed to be more scalable, interoperable, and responsive to the evolving needs of the Web3 community.

As part of this transformation, the MKR token has been "retired from all governance responsibilities" and is currently on a trajectory for a future integration into the broader SKY ecosystem.

The current holders of MKR tokens are being urged to upgrade their holdings to SKY, or else they will lose their influence and benefits in the ecosystem as the MKR token fades into obsolescence.

This alteration embodies a decisive movement in the arrangement and appearance of the future decentralized governance, staking, and performance-based incentives envisaged by the Sky Protocol team.

This remaking of Sky Protocol, according to the team, is not simply a rebranding effort. It represents a complete makeover—a total transformation from a governance model based largely in Web2 to one designed for Web3.

If this next-generation governance system works, it should allow for totally decentralized decision-making by a community of nearly 6,000 Sky Protocol token holders.

From MakerDAO to Sky Protocol: A New Era of DeFi Governance

Sky Protocol signals the evolution of MakerDAO—not only one of the earliest but also one of the most influential DeFi projects—into an even more expansive and forward-thinking protocol. With the introduction of the SKY token, governing MakerDAO becomes even simpler and fairer. The SKY token offers even greater accessibility and flexibility to users, and it incentivizes long-term performance of the protocol by linking much of its governance directly to the performance of SKY.

The governance model we are introducing empowers holders of the SKY governance token with an array of rights, including the right to vote on protocol changes (as well as the ability to direct this voting power to trusted representatives, if desired) and the right to significantly influence the development direction of Sky Protocol.

@SkyEcosystem (prev. Maker DAO) has officially transitioned $MKR to $SKY, which is now the sole governance token powering the protocol’s future.

Holders of $MKR must upgrade to $SKY to keep their influence and benefits in the ecosystem. Otherwise, MKR will slowly fade out. pic.twitter.com/DiRXTjUIWv

— Crypto Miners (@CryptoMiners_Co) May 21, 2025

We hope that also makes our governance mechanism more robust and responsive—in other words, capable of being both well-run and well-scaled.

Sky Protocol has stressed that all holders of MKR must upgrade their tokens in order to still take part in governance decisions and receive protocol rewards. The upgrade rate has been set at 1 MKR = 24,000 SKY, a rate that highlights the protocol’s desire to grow its community and governance participation.

Time-Sensitive Transition: Penalties Begin in September 2025

To promote fast engagement in the upgrade process, Sky Protocol has put forward a penalty mechanism that operates on a time basis. Beginning on September 18, 2025, holders of MKR who have not yet completed the transition to SKY will suffer a devaluation in their conversion rates; in other words, the MKR holdouts will get precisely 0.78 SKY tokens for every MKR they do manage to convert, instead of the 1.0 SKY tokens the protocol would otherwise issue. Although this is the first time we have seen a penalty mechanism employed in this context, and it almost seems like a more sophisticated version of the nudges used to promote health behaviors or save money for retirement, in Sky’s case, it’s all about getting its community up to speed on a new and better version of its decentralized operating system.

Individuals who finish the update prior to the deadline of September 18 will obtain the entire 24,000 SKY for each MKR token and will enjoy unhindered governance and staking benefits. On the other hand, users who upgrade after the deadline may have less governance power and diminished opportunities to earn rewards, reinforcing the importance of upgrading sooner rather than later.

Unlocking New Features with the Sky Staking Engine

A feature that stands out with the launch of the SKY token is the Sky Staking Engine, a new rewards system that allows for returns earned on SKY that are based on how well the protocol performs. When users stake SKY, they are doing more than just supporting the network’s security and decentralization; they are now co-investing (with the protocol) in the protocol’s success. And the rewards scale with how well the protocol performs.

Sky Protocol’s mission is to align community incentives with