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GM, Aleks here.
Old brands die hard. A case in point: storied, multibillion-dollar DeFi protocol Sky, formerly known as Maker, is struggling to get people to use new tokens launched alongside last year’s controversial rebrand.
Sky tried the carrot. Soon, it’ll try the stick. More on that in a moment.
The rebrand was just one part of a larger transformation dubbed “Endgame” by Sky’s founder, Rune Christensen.
But everything about Endgame was done with one goal in mind, according to Christensen: bringing DeFi to the masses.
That meant a new governance token, which grants its holders membership and voting rights in the cooperative that ostensibly runs Sky.
(Christensen holds outsize sway in the cooperative and has said the changes in Endgame would make it more democratic.)
The old governance token, MKR, could be upgraded to the new one, SKY, at a rate of 1 to 24,000.
Unit bias would drive investment, Christensen told me last year, as retail investors are more likely to spend $1,756 — the value of a single MKR token as of Tuesday morning — on 24,000 SKY tokens than on one MKR.
Seeking mass appeal also meant creating a new stablecoin.
Sky’s first stablecoin, DAI, represented something close to the crypto ideal when it first launched.
Pegged to the US dollar, backed entirely by Ether, and lacking a freeze function, it was pure, un-seizable digital cash. Cypherpunks — and cybercriminals — loved it.
Sky’s new stablecoin, USDS, contains a freeze function in its code, allowing Sky to confiscate funds from criminals and better comply with anti-money laundering regulations.
And yet, despite lavishly subsidizing USDS adoption with higher interest rates, DAI is once again the more popular option.
To be sure, USDS has had a remarkable run: It’s about eight months old, and in January it surpassed DAI in circulating supply.
But it’s had a rough week, with its supply dropping 10% to about $3.7 billion, according to DefiLlama data. In that span, DAI supply has grown about 9%, to more than $4.4 billion.
For what it’s worth, Sam MacPherson, of the affiliated Spark protocol, has called DAI’s recent growth an “accounting quirk.”
Moreover, some 519,000 Ethereum-based crypto wallets hold DAI, according to Sky’s own data. Only 2,300 wallets hold USDS.
That’s despite Sky paying out 4.5% interest on USDS deposits and a mere 2.5% on DAI deposits. That’s the aforementioned carrot.
The SKY governance token faces a similar issue.
Only 11% of MKR tokens have been converted to SKY tokens, according to one estimate. About 101,000 crypto wallets hold MKR; only 2,000 hold SKY.
That has been “a key limiting factor preventing exchanges from adopting SKY,” Christensen said in the Sky governance forum recently.
A new proposal to finalise the upgrade from MKR to SKY will fix all that. Among other things, it will formally transfer control of the cooperative from MKR holders to SKY holders, disable “downgrades” in which people convert their SKY to MKR, and introduce a 1% penalty on those who upgrade after September 18.
Let’s see whether the stick works.
Top DeFi stories of the week
This week in DeFi governance
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Post of the week
Sometimes prediction markets find signal amid the noise. Sometimes … not so much.
"Prediction" markets pic.twitter.com/uLuDa0KLoB
— Lefteris Karapetsas (@LefterisJP) May 8, 2025
Got a tip about DeFi? Reach out at aleks@dlnews.com.
