MakerDAO Transitions to Sky, Signaling a New Chapter in Governance
On August 27, 2024, MakerDAO officially rebranded as Sky, marking a significant evolution in its governance model, aimed at enhancing ecosystem scalability and integrating real-world applications. A year later, while the foundational elements of this transformation appear to be established, the adoption narrative presents a mixed picture. The rebranded protocol now manages over $7.8 billion in stablecoin obligations across DAI and its new counterpart, USDS. However, despite significant investments in marketing strategies and ecosystem developments, the performance metrics of Sky’s primary stablecoins have stagnated or even declined in some instances.
Governance Restructuring and Financial Ambiguities
Efforts to restructure capital and a comprehensive token migration are underway, fundamentally altering the governance framework of the protocol. During a recent community call, Sky co-founder Rune Christensen discussed the complexities surrounding the organization’s financial metrics. “We use three distinct methods for evaluating our financial standing, yet none of them seem to align,” Christensen explained. He highlighted the discrepancy between on-chain profit and loss estimates, such as the Steakhouse report indicating an $8 million profit for Q2, and projections from dashboards suggesting a $300 million annual run-rate, attributing this inconsistency to “capital transaction” accounting. “By excluding capital transactions from our calculations, we are inadvertently underreporting profits,” he added.
Criticism Over Management Costs and Market Position
Critics, including notable commentator PaperImperium, have raised concerns regarding the efficiency of the management team. “The total expenditure for the design, planning, and launch of USDS has been substantial,” he noted on social media, estimating that approximately $44 million was spent in recent years, with current annual expenses around $100 million. Despite these financial incentives, USDS has struggled to gain significant market share compared to DAI and other stablecoin rivals, even under favorable market conditions. Inquiries made to the Sky team were redirected to the community call for responses.
Institutional Focus and User Dynamics
Rajiv, a key contributor to Sky’s analytics, provided insight during the community call, suggesting that the ideal audience for sUSDS comprises larger, institutional investors who prioritize immediate liquidity. Recent stakers, including crypto investment firms like Galaxy Digital, have been mentioned, even as participation from smaller users in Sky’s token reward system has declined. Data from Etherscan reveals that sUSDS, which currently earns a Sky savings rate of 4.75%, is maintained across 4,656 wallets. While this figure does not include some sUSDS used as collateral in decentralized finance (DeFi) smart contracts, it represents a roughly accurate count of those engaging with the protocol.
Stablecoin Dynamics and Capital Formation Strategy
Despite the challenges, the combined supply of USDS and DAI remained largely unchanged at the end of Q2 2025, with an unexpected development: DAI has seen a resurgence in demand. Rajiv pointed out that a notable trend of increased interest in DAI has emerged recently. This indicates a broader shift in strategy; Sky is moving away from a pure focus on transactional stablecoin product-market fit and is now concentrating on capital formation through unique ecosystem elements like Spark and Grove. These initiatives are intended to position USDS as a foundational capital layer while attracting risk capital into higher-yield investment strategies.
Transitioning Governance from MKR to SKY
Another significant development is the shift from MKR to SKY, which is nearing completion. By May 2025, the SKY token will hold exclusive governance rights, with MKR holders able to convert their tokens at a ratio of 1:24,000. The conversion rate saw a notable increase during Q2, as data from Blockworks Research illustrates, coinciding with the announcement of a “Delayed Upgrade Penalty”—a planned 1% reduction in the conversion ratio every three months starting September 18. Christensen emphasized the importance of this transition for reducing fixed costs and ensuring consistent income for SKY holders.
Future Governance and Market Growth Prospects
Sky’s staking system is also showing promise, allowing participants to earn rewards in USDS or reinvest in SKY through Yearn Finance’s liquid-staking vault. Looking forward, Sky’s governance framework is expected to evolve further with the introduction of the “Core Council,” and potential staking reforms may implement lock-up periods and protections against liquid staking tokens (LSTs). Christensen framed this as a long-term initiative, projecting a two-year roadmap aimed at achieving institutional-grade governance and capital structure management. Despite the market not yet rewarding the protocol with significant user growth, the foundational architecture is strong. “Sky will develop as a comprehensive economy,” Christensen stated. “We aim for integrated growth, rather than having USDS confined to niche applications.”
