What is Sky (SKY)?

Deep Dive

1. Purpose & Value Proposition

Sky Protocol aims to simplify DeFi access while maintaining decentralization. Its core innovation, USDS, is a collateral-backed stablecoin offering yields via the Sky Savings Rate (4.5% APY) and Sky Token Rewards (variable SKY rewards). Users retain full control of assets, contrasting custodial platforms. The protocol evolved from MakerDAO in 2024 to address scalability and governance challenges, prioritizing user-centric features like seamless Layer 2 integration via SkyLink and reduced Ethereum gas fees.

2. Technology & Architecture

Built on Ethereum, Sky uses decentralized governance smart contracts to manage upgrades, collateral, and rewards. Key innovations:
- Sky Stars: Independent sub-projects (e.g., Spark for lending) that expand ecosystem utility while adhering to Sky’s governance.
- SkyLink: Bridges Ethereum with Layer 2s (Arbitrum, Base) for faster, cheaper transactions.
- Staking Engine: Replaced Maker’s Seal Engine, enabling SKY staking for rewards and governance delegation without exit fees.

3. Tokenomics & Governance

• SKY: 1 MKR = 24,000 SKY post-rebrand, with buybacks (1B+ tokens burned since 2024) to reduce supply.
• Governance: Proposals are voted on-chain via SKY holdings, guided by the Sky Atlas—a dynamic rulebook refined through community input.
• Ecosystem Funding: 50% of protocol revenue funds SKY buybacks, while Stars like Spark allocate rewards to USDS depositors.

Conclusion

Sky reimagines MakerDAO’s foundation with a focus on accessibility, modular growth, and sustainable tokenomics. Its dual-token system (USDS for stability, SKY for governance) and ecosystem of Stars position it as a DeFi hub for savings and decentralized finance innovation. Can Sky’s community-led governance maintain agility as the ecosystem scales?