What is Sky (SKY)?

Deep Dive

1. Purpose & Evolution

Sky Protocol represents a strategic evolution of MakerDAO. Its core purpose is to function as a decentralized infrastructure for stablecoin issuance and capital allocation, often described as "DeFi's federal bank" (Standard Chartered). The protocol manages the creation of USDS (which succeeded DAI) and lends it to a network of independent "Agent" entities that deploy capital for yield, creating a sustainable revenue model.

2. Ecosystem & Core Product

The ecosystem is centered on USDS, a stablecoin that users can deposit into a savings module to earn the Sky Savings Rate (SSR), a yield set by governance and funded from protocol surplus. As of early November 2026, this rate was 3.80% (TokenPost). The protocol generates revenue primarily through stability fees from loans and yield from real-world asset (RWA) investments, which then funds user savings, SKY buybacks, and staking rewards.

3. Tokenomics & Governance

SKY is the exclusive governance token, acquired by upgrading the legacy MKR token at a 1:24,000 ratio. New token emissions are permanently disabled. A portion of the protocol's net surplus is used for open-market SKY buybacks; these purchased tokens are then distributed as staking rewards or permanently burned, creating a deflationary pressure tied directly to protocol performance. Governance decisions, such as adjusting the savings rate or buyback allocation, are made by SKY holders.

Conclusion

Sky is fundamentally a decentralized, revenue-generating protocol that combines stablecoin issuance, institutional-grade capital allocation, and community governance through the SKY token. As the landscape for yield-bearing stablecoins grows more competitive, will Sky's established infrastructure and sustainable model allow it to cement its role as a central pillar of DeFi?