Sky (SKY) Price Prediction

Deep Dive

1. Protocol Buybacks & Staking Rewards (Bullish Impact)

Overview: Sky Protocol has bought back 1.1B SKY (3.28% of supply) using USDS revenue, with weekly purchases averaging $1M+ (Sky Ecosystem). The upcoming Activation module (Q1 2026) will let users stake SKY for USDS and “Star token” rewards, creating a yield-driven demand loop.

What this means: Buybacks reduce sell pressure, while staking could lock up ~20% of circulating supply (based on similar DeFi models). Historically, SKY rallied 18% in November 2025 after a $40.5M buyback announcement (BNB Chain News).

2. MKR Conversion Penalty Timeline (Mixed Impact)

Overview: Holders face a 1% penalty (rising quarterly) for delaying MKR→SKY swaps after September 18, 2025. Over $316M MKR remains unupgraded, per August 2025 data (The Block).

What this means: Short-term, forced conversions could flood markets with SKY. Long-term, full migration consolidates governance and eliminates legacy token overhang. In July 2025, SKY rose 12% post-staking launch as upgrades crossed 56% completion (CoinMarketCap).

3. Stablecoin Regulatory Positioning (Bullish Risk)

Overview: USDS now backs $7.6B in reserves, with yields up to 4.5% – compliant under the U.S. GENIUS Act. However, Aave’s recent delisting of USDS as collateral cut its DeFi utility by ~15% (Aave Proposal).

What this means: Regulatory clarity could attract TradFi partners, but reliance on centralized stablecoins (USDC/USDT) for collateral leaves SKY vulnerable to liquidity shifts. The 2025 DAI→USDS migration saw 29% supply growth, suggesting foundational demand.

Conclusion

SKY’s path hinges on executing supply contraction (buybacks/staking) while navigating USDS’s DeFi reintegration. The MKR upgrade cliff on September 22, 2025, is a make-or-break liquidity event. Can Sky’s treasury ($1.21B) sustain buybacks if USDS adoption stalls? Watch the SKY/USDS trading pair – a hold above 0.000022 would signal institutional accumulation.