DeFi Community Reacts to MakerDAO Rebranding as Sky, Questioning Decentralization

On August 27, MakerDAO, a leading name in decentralized finance (DeFi), announced its rebranding as “Sky” as part of its broader strategy to enhance the protocol’s scalability and accessibility.

The rebranding to Sky includes the launch of two new tokens — USDS, an upgraded version of the DAI stablecoin, and SKY, a new governance token replacing MKR.

MakerDAO’s Rebranding to Sky Introduces New Tokens

Sky’s leadership sees this move as crucial for making decentralized finance more accessible and user-friendly. USDS, the new stablecoin, is designed to be a more resilient and scalable alternative to DAI. It offers the same 1:1 conversion rate as DAI, ensuring a smooth transition for users.

Meanwhile, the SKY token serves as the upgraded governance token and provides enhanced functionality. This includes access to the Sky Savings Rate (SSR) and Sky Token Rewards (STRs), which reward user participation.

Read more: Dai (DAI) Cryptocurrency: A Beginner’s Guide

The USDS and SKY tokens will allow users to choose whether to transition to the new tokens. Each MKR token can be exchanged for 24,000 SKY tokens, while DAI can be swapped 1:1 with USDS.

The introduction of these tokens also aligns with Sky’s broader “Endgame Plan,” which aims to address some of the core challenges facing DeFi today, including scalability and regulatory compliance. The Endgame Plan, as envisioned by MakerDAO’s co-founder Rune Christensen, serves as the foundation for Sky’s transformation.

It introduces the concept of “Sky Stars,” independent decentralized projects designed to foster innovation within the Sky ecosystem while maintaining autonomy. The plan also includes the launch of Sky.money, a non-custodial platform intended to simplify access to the Sky protocol.

Sky’s transition also considers regulatory compliance, with certain features like SSR and STRs restricted in specific jurisdictions. This careful approach showcases Sky’s commitment to adhering to global regulations while expanding its reach within the DeFi space.

“After the core elements described above go live, Sky will focus on bringing the next round of innovations to market. The following are expected to be live soon after the initial September 18 launch date,” Christensen said in a governance post.

The DeFi community has had varied reactions to the rebranding. While some applaud the move as a necessary evolution in response to market demands, others are concerned that it shifts away from the decentralized principles that originally defined MakerDAO. Critics argue that USDS, despite its technical advancements, could compromise the decentralization ethos that DAI once embodied.

“MakerDAO was an OG DeFi protocol aiming to build an autonomous, decentralized stablecoin with low volatility against fiat currency, backed by ETH. DAI is now migrating to USDS, a stablecoin that goes against its original vision,” Lumberg, one of the prominent DeFi community members, commented.

Others are concerned about the long-term effects on the DeFi sector. They suggest that introducing USDS and SKY may lead to a centralization trend within the space.

“For all intents and purposes, there is no reason to use DAI anymore. It’s literally just USDC with a different name,” another community member remarked.

Read more: Top 11 DeFi Protocols To Keep an Eye on in 2024

Maker’s TVL. Source: DefiLlama

According to DefiLlama data, Maker is the fourth largest DeFi protocol, with a total value locked (TVL) of $6.28 billion. The data also shows that DAI is the third largest stablecoin, trailing Tether’s USDT and Circle’s USDC. DAI’s market capitalization is $5.25 billion at the time of writing.

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