MakerDAO Rebrands to Sky: What Does It Mean for the Protocol and Tokens?
Yesterday, MakerDAO announced a major rebranding. The protocol will now be known as Sky, with its decentralized stablecoin DAI renamed to USDS, and MKR token upgraded and split into SKY. In this article, we will break down the details of this rebranding.
MakerDAO Official Announcement Insights
Sky has introduced new tokens, SKY and USDS, which are upgrades from the original MKR and DAI tokens. These upgrades are designed to make the protocol more appealing for users seeking savings returns without sacrificing control.
Governance Token SKY
In a previous announcement six days ago, MakerDAO mentioned that renaming the governance token is intended to encourage broader participation in governance. The new governance token, SKY, will be obtained through a token split. Each MKR will be split into 24,000 SKY tokens. As of this writing, MKR is priced at approximately 1950 USDT, translating to a post-split value of 0.08125 USDT per SKY token.
Sky has also stated that users can acquire SKY tokens by depositing USDS into the Sky Protocol via its official website, Sky.money. However, specific details and data on this method have yet to be released. This process differs from MKR, which was primarily minted to cover shortfalls in the Dai system when collateral was insufficient.
The USDS Stablecoin
USDS can be obtained through a 1:1 exchange with DAI. Additionally, users can convert ETH, USDC, and USDT into USDS on the official website. This exchange option will become available 21 days from now, on September 18.
Sky Protocol has launched a SKY double rewards eligibility campaign. Users can participate by completing a few social media tasks and signing with the wallet they will later use for deposits. When the exchange opens in 21 days, users can receive rewards by supplying USDS to the Sky token rewards module.
A Shift Toward Centralization
A significant change to note is that the upgraded USDS will have a freeze function, as confirmed by Spark Protocol CEO Sam MacPherson. This is a notable departure from DAI, which did not have such a feature.
For comparison, centralized stablecoins like USDT and USDC have freeze functions. With this new feature, DAI can no longer be considered a fully decentralized stablecoin. Given its yield mechanism, it is more accurately described as an RWA (Real-World Asset) product.
Sky also emphasized that the SKY double eligibility rewards campaign (referred to as the X Activation campaign in the terms) is not available to users in U.S. jurisdictions.
Coindarwin discovered additional centralization restrictions in the Sky Protocol’s legal terms, including:
- Geographical Restrictions: Users cannot reside in or be based in countries such as Afghanistan, Belarus, Myanmar, Central African Republic, China, Cuba, Democratic Republic of Congo, Ethiopia, Guinea, Haiti, Hong Kong, Iran, Iraq, Lebanon, Libya, Mali, Nicaragua, North Korea, Russia, Somalia, South Sudan, Sudan, Syria, the UK, Venezuela, Ukraine, Yemen, and Zimbabwe. MakerDAO founder Rune Christensen also reiterated these jurisdictional restrictions in an interview with Cointelegraph.
- Restrictions on Sanctioned Users: Users must ensure they do not engage in transactions with individuals sanctioned by the U.S. Treasury’s Office of Foreign Assets Control (OFAC), the European Union (EU), or the United Kingdom (UK).
- VPN and Privacy Tools: Users are prohibited from using VPNs, proxy servers, or any other privacy or anonymity tools to bypass service restrictions, particularly those related to geographic availability.
Other Impacts
For regular users, the shift in the protocol and token centralization might not significantly affect their experience. However, token splits often lead to secondary market speculation, which could be the most noticeable impact for everyday users.
One of the most critical changes for other protocols is that MakerDAO’s subDAOs will gain the authority to issue their own tokens. The first subDAO likely to issue a token is Spark Protocol.
In an interview with Cointelegraph, MakerDAO co-founder Rune Christensen stated that Maker subDAOs would become Sky Stars, continuing as independent decentralized projects. They will connect to the Sky ecosystem through unique business models and autonomy.
Each Sky Star will have the ability to issue governance tokens, manage its finances and community, and independently execute DAO-specific decisions.
This move aims to foster innovation, experimentation, and additional risk-taking through Sky Stars, while Sky Protocol itself focuses on maintaining the stability and security of the USDS stablecoin.