Rune Christensen, co-founder of Sky Protocol (formerly MakerDAO), has presented an innovative proposal that seeks to establish deflationary tokenomics for its native token. 

This proposal, presented by Christensen through X, aims to ensure the sustainable growth of the decentralized protocol. According to the co-founder, the implementation of deflationary tokenomics could strengthen the fundamental structures of the protocol, either under the Maker brand or with a complete transition to the Sky protocol. 

As reported by this media outlet, MakerDAO announced a rebranding of its protocol in late August, adopting the Sky name amid a series of updates and implementations designed to build a new generation of services in the DeFi ecosystem. However, the change was not well received by all members of the maker community, with many disagreeing on the usefulness of switching to a new token, in this case SKY.  

Due to this situation, Christensen revealed early last week that the protocol governance would be discussing a proposal to keep the name Maker and the MRK token, or change it to Sky Protocol and SKY, respectively.  

Now, in his new release, Christensen attempts to provide more clarity and detail on his proposal. 

SKY’s Deflationary Tokenomics  

Christensen’s proposed tokenomics is based on eliminating token issuance under normal conditions, so that the total supply of SKY or MKR only decreases over time. Christensen proposes a token-burning engine that permanently removes SKY tokens from circulation. This ensures his goal of a deflationary token.  

However, his proposal includes an exception: In the event of a collateral shortfall that threatens the stability of the protocol’s stablecoins, such as Sky Dollar (USDS) and DAI, the token burning engine will be activated. 

“To follow the governance vote on whether to keep Sky or recenter the Maker brand, I’m preparing a proposal that clarifies tokenomics and other key questions,” posted Rune on October 30. 

Christensen also explained that in addition to this deflationary structure, his proposal includes the introduction of “Star Token Rewards,” a program that allows token holders to earn additional rewards by participating in managing and activating the protocol’s seal engine. By doing this, Christensen aims to both reinforce the Token’s deflationary model and incentivize the community to get involved with the token. 

Key Vote: Sky or Maker? 

The protocol community will have a vote on whether to keep the Maker name or fully adopt the Sky identity. According to Christensen, if the decision is made to adopt the Sky name, the protocol will transition all MKR tokens to SKY and rename MKR tokens as Wrapped 24k Sky Tokens (SKY24K), a transition designed to avoid confusion for MKR holders and ensure that no further action is required to retain a position in the protocol. 

On the other hand, the SKY token will become a “star” in the ecosystem, complementing Spark, another token focused on attracting borrowers and managing collateral, if the old name, Maker, is retained. In this scenario, Christensen says the SKY token will be renamed OLD_SKY and can be converted back to MKR at 1:24000. 

Christensen envisions an ecosystem in which Spark and Sky act as complementary “stars”. While Spark will focus on allocating collateral and incentivizing lending, Sky will focus on promoting USDS stablecoin adoption. Sky will also control the Sky.money platform. Sky.money will generate revenue through an access reward system, incentivizing projects that increase USDS adoption. 

By Leonardo Perez 

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