About
Sky is a decentralized finance (DeFi) protocol that represents the comprehensive rebranding and technical evolution of MakerDAO, the organization responsible for the DAI stablecoin. Launched as the centerpiece of founder Rune Christensen’s "Endgame" plan, the protocol aims to make decentralized financial tools accessible to a global audience by simplifying the user experience and modularizing its internal governance. By transitioning from the legacy Maker brand to Sky, the ecosystem introduces a more streamlined front-end interface and a refreshed economic model designed to scale beyond the constraints of early DeFi experiments.
The protocol functions through a decentralized credit system where users can deposit volatile collateral, such as ETH or wrapped BTC, to generate USDS, the upgraded successor to the DAI stablecoin. This overcollateralized lending model remains the core engine of the system, ensuring that the circulating supply of USDS is always backed by more value than it represents. A critical technical addition is the Sky Savings Rate (SSR), which allows USDS holders to earn a variable interest rate natively within the protocol, similar to the legacy DAI Savings Rate but with improved liquidity and integration features.
A major structural innovation of the Sky ecosystem is the implementation of "Sky Stars," which are independent, community-governed sub-DAOs. These Stars, such as Spark (the first institutional lending protocol in the network), operate autonomously while contributing value back to the main Sky Protocol. This modular approach allows for rapid innovation in specialized sectors like real-world asset (RWA) tokenization and high-frequency lending without burdening the core governance of the main protocol. Each Star can issue its own tokens and governance structures, creating a nested ecosystem of innovation.
The SKY token is the native governance and utility asset of the protocol, having replaced the MKR token through a 1:24,000 redenomination. This expansion in total supply was designed to lower the unit price of the governance token, making participation more accessible to smaller holders. SKY holders are responsible for voting on critical parameters, including collateral types, stability fees, and the approval of new Sky Stars. Furthermore, the token can be utilized in the "Staking Engine," where holders can "seal" or activate their tokens to earn rewards in the form of USDS or Star tokens.
Economically, the protocol maintains a systematic buyback and stabilization program to manage the value of the SKY token and the peg of USDS. Through the use of surplus protocol fees, the DAO can execute on-chain repurchases of SKY to reduce circulating supply or support market liquidity. As the protocol matures, the focus remains on "chain abstraction," allowing the Sky ecosystem to function seamlessly across multiple Layer 2 networks through SkyLink, ensuring that users on Base, Arbitrum, and other chains can access the protocol’s features without significant friction or gas costs.
