What could affect the price of SKY?
SKY’s price is balancing between upcoming protocol upgrades and challenges in the market.
- MKR Conversion Penalties – Starting September 22, a 1% fee will apply to unconverted MKR tokens, encouraging holders to swap $316 million worth of MKR to SKY, which helps reduce the risk of too many tokens flooding the market.
- Aggressive Buybacks – Since February 2025, Sky Protocol has repurchased 1.1 billion SKY tokens (about 3.3% of total supply), burning $1.4 million worth weekly to support the price.
- Stablecoin Competition – USDS, with a market cap of $7.6 billion, faces strong competition from Tether (USDT), which has increased its market dominance by 4.7% since 2024.
Deep Dive
1. Governance-Driven Supply Shock (Positive for Price)
Overview:
A current governance vote will introduce increasing penalties for delaying the conversion of MKR tokens to SKY, starting with a 1% fee on September 22 and increasing by 1% every quarter. There are still 176,000 MKR tokens (worth $316 million) that haven’t been converted. This penalty encourages holders to swap sooner, reducing the number of tokens that could be sold on the market.
What this means:
If conversions speed up, about 4.2 billion SKY tokens (roughly 18% of the circulating supply) could be taken out of circulation, making the market tighter. Similar forced upgrades in the past, like Ethereum’s Merge, reduced the number of tokens available to sell and often led to price increases.
2. Buyback Program vs. Market Challenges (Mixed Outlook)
Overview:
Sky Protocol has spent $75 million in 2025 buying back SKY tokens at an average price of about $0.07, using revenue generated by the protocol (estimated at $230 million annually). However, technical indicators like RSI (44) and MACD (-0.0014) suggest bearish momentum, reflecting broader declines in the crypto market, which lost 6.29% in total value over the past week.
What this means:
While buybacks help support the price by creating a floor, they face pressure from overall market uncertainty. The 200-day exponential moving average (EMA) at $0.071 is a key resistance level—if SKY’s price can close above this consistently, it may signal a positive trend reversal.
3. Stablecoin Adoption Race (Potential Risk)
Overview:
USDS, a stablecoin linked to SKY, holds a 4.7% market share compared to Tether’s dominant 69.1%. The S&P rating agency has given USDS a “constrained” peg stability rating (4 out of 5 risk), indicating some concerns. Tether’s 24-hour trading volume ($53 billion) far exceeds USDS’s $21 million, limiting demand for SKY tokens tied to USDS.
What this means:
Lower adoption of USDS means less fee revenue for Sky Protocol, which impacts buybacks and staking rewards. To address this, Sky has launched a $25 million Hyperliquid incentive program to boost adoption of the USDH stablecoin (The Block), aiming to expand beyond Ethereum’s ecosystem.
Conclusion
SKY’s future depends on successfully encouraging MKR holders to convert their tokens through penalties, while competing against dominant stablecoins in DeFi. The 1.11 billion token buyback program provides some price support, but breaking above the 200-day EMA at $0.071 is crucial for upward momentum. The success of Sky’s Layer-2 integrations via SkyLink could be key to driving new demand for USDS and supporting the token’s growth.
What are people saying about SKY?
The Sky (SKY) community is caught between hope from ongoing buybacks and concern over an upcoming conversion deadline. Here’s what’s trending right now:
- $1.4 million in weekly buybacks are reducing the supply, but the price still faces challenges.
- A vote on MKR-to-SKY penalties is driving a last-minute rush to upgrade.
- A bullish engulfing candle pattern is giving some short-term optimism for price gains.
Deep Dive
1. Sky Ecosystem: Buybacks Reach 1.1 Billion SKY, Speeding Up Deflation 🔥
Last week, 17.32 million SKY tokens were bought back, worth about $1.39 million. This brings the total buybacks to 1.1 billion SKY, which is about 3.28% of the total supply.
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What this means: Buybacks are generally positive because they take tokens out of circulation, reducing supply by roughly $250,000 worth daily. However, the price has dropped 23% over the past 60 days, showing that investors remain cautious about how much these buybacks will help in the long run.
2. Technical Analysis: Potential 35% Rally on Daily Chart 📈
A recent bullish engulfing candle pattern suggests SKY could first test the 21-day exponential moving average (EMA) at $0.072, then possibly reach $0.088.
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What this means: This is a neutral-to-positive technical signal. The 21 EMA is about 10% above the current price of $0.065, but the Relative Strength Index (RSI) at 41 indicates weak momentum. To confirm an upward trend, SKY needs to break above $0.068.
3. Investors Rush to Convert as $323M MKR Faces 1% Penalty Countdown ⏳
About 174,000 MKR tokens, worth $323 million, remain unconverted ahead of the September 22 deadline. After that date, a 1% quarterly penalty will apply to unconverted tokens.
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What this means: There’s a risk of selling pressure as late converters might sell their SKY tokens immediately after upgrading to avoid penalties. Still, with 81% already converted, most holders seem aligned with the new governance system.
Conclusion
The overall outlook for SKY is cautiously optimistic. The community is balancing strong token management strategies like buybacks and staking against concerns about the conversion deadline and recent weak price performance. Keep an eye on the September 22 MKR upgrade deadline — a smooth transition could confirm confidence in Sky’s governance changes, while delays might lead to selloffs from holders trying to avoid penalties. The 21 EMA at $0.072 is a key technical level to watch.
What is the latest news about SKY?
Sky is managing important changes in its governance and growing interest from big investors, all while working to phase out its old token. Here’s what’s happening:
- Penalty for Late Upgrades (September 19, 2025) – Starting September 22, a 1% fee applies to converting MKR tokens to SKY, increasing by 1% every three months.
- $323 Million MKR Conversion Rush (September 19, 2025) – Many investors are rushing to convert their MKR tokens to avoid fees, as nearly 20% of MKR is still not swapped.
- Grove’s $1 Billion Institutional Investment (July 3, 2025) – Grove is using USDS tokens to bring $1 billion into institutional credit markets through a new tokenized loan strategy.
Deep Dive
1. Penalty for Late Upgrades (September 19, 2025)
What’s happening: Sky’s community voted to introduce a penalty fee to encourage everyone to switch from the old MKR token to the new SKY token. Starting September 22, if you convert MKR to SKY, you’ll pay a 1% fee, which will go up by 1% every three months after that. So far, 81% of MKR holders have made the switch.
Why it matters: This penalty is designed to speed up the transition and simplify Sky’s governance. However, if many people rush to convert at once, it could temporarily increase the number of SKY tokens in circulation. (The Block)
2. $323 Million MKR Conversion Rush (September 19, 2025)
What’s happening: Even though 82% of MKR tokens were converted since September 1, about $323 million worth of MKR still hasn’t been swapped just days before the penalty starts. Smaller holders are slower to convert compared to large investors.
Why it matters: A last-minute rush to convert could put pressure on exchanges and liquidity. If many holders delay, it could cause issues with how the network is governed. Key numbers to watch include SKY’s daily trading volume ($21.4 million) and MKR’s price stability (around $1,853 before conversion). (Yahoo Finance)
3. Grove’s $1 Billion Institutional Investment (July 3, 2025)
What’s happening: Grove has joined Sky’s ecosystem as a major partner, investing $1 billion into tokenized collateralized loan obligations (CLOs) using the USDS stablecoin. This is the first time USDS is being used in large-scale institutional credit markets.
Why it matters: This move shows that USDS is gaining trust beyond individual investors and retail decentralized finance (DeFi). It could attract more institutions looking for yield opportunities. Sky’s treasury now holds $1.21 billion, supported partly by $100 million in yearly protocol revenue. (Sky Ecosystem)
Conclusion
Sky is focusing on retiring the old MKR token while expanding USDS’s role in institutional finance. With penalties for late conversions coming soon and Grove’s large investment underway, Sky is positioning itself as a bridge between decentralized finance and traditional finance. The big question: will the rush to convert MKR cause market ups and downs, or will Grove’s investment help stabilize things?
What is expected in the development of SKY?
Sky’s roadmap is focused on improving governance, growing its ecosystem, and bringing in institutional partners.
- Delayed Upgrade Penalty (September 18, 2025) – MKR holders who don’t upgrade will face penalties.
- Powerhouse Spin-off (Q4 2024) – Powerhouse will become an independent part of the ecosystem.
- Core Simplification Process (2025) – Plans to simplify governance and encourage growth.
Deep Dive
1. Delayed Upgrade Penalty (September 18, 2025)
Overview:
Starting September 18, 2025, a 1% penalty will be applied to MKR-to-SKY conversions for holders who haven’t upgraded. This penalty will increase by 1% every three months. The goal is to encourage MKR holders to switch to SKY, unifying governance under the new token.
What this means:
This is positive for SKY because it helps phase out MKR, reducing split control over governance. However, if many holders delay upgrading, the penalties might cause some to sell off MKR, which could temporarily affect market sentiment.
2. Powerhouse Spin-off (Q4 2024)
Overview:
Powerhouse, Sky’s decentralized operations platform, is set to become its own independent entity. As of September 2025, it’s about 39% complete. Key steps include setting up legal structures, defining token economics, and building community support.
What this means:
This is neutral for SKY in the short term because spin-offs can shift developer attention away from the main project. Over time, though, Powerhouse could increase SKY’s usefulness if it attracts new users and connects with Sky’s treasury and governance.
3. Core Simplification Process (2025)
Overview:
A community proposal aims to make Sky’s governance simpler by cutting down bureaucracy and speeding up the growth of “Stars” — smaller sub-ecosystems like Spark and Grove.
What this means:
This is positive for SKY if approved, as simpler governance can lead to faster decisions and attract new partners. Still, there are risks, such as too much centralization or rushing important changes.
Conclusion
Sky’s roadmap balances enforcing token upgrades (through penalties), decentralizing the ecosystem (via spin-offs), and improving governance efficiency (with simplification). While each step has risks, they support Sky’s long-term goal of making USDS and SKY key players in bringing decentralized finance (DeFi) to institutions. If Powerhouse grows beyond the Sky ecosystem, SKY’s role could become even more important.
What updates are there in the SKY code base?
Sky’s latest software updates focus on improving governance, expanding decentralized finance (DeFi) features, and integrating with institutional investors.
- Delayed Upgrade Penalty (September 2025) – Introduces penalties for MKR token holders who delay converting to SKY through smart contracts.
- SPK Farming Module (July 2025) – Launches staking rewards for SPK, Sky’s first Star Token.
- Tokenized CLO Integration (July 2025) – Enables institutional-level credit strategies using Centrifuge technology.
Deep Dive
1. Delayed Upgrade Penalty (September 2025)
Overview: Starting September 22, 2025, Sky enforces a 1% penalty on MKR holders who postpone converting their tokens to SKY. This penalty increases every quarter and is built into the upgrade smart contracts, reducing the conversion rate for late participants. So far, over 81% of MKR tokens have been converted, but about $323 million worth remain unconverted.
What this means: This change encourages remaining MKR holders to switch to the new governance system, simplifying the token ecosystem. While this helps SKY in the long run, it might cause some short-term selling pressure if hesitant holders decide to exit.
(Source)
2. SPK Farming Module (July 2025)
Overview: Sky introduced a new feature allowing users to stake USDS stablecoins and earn SPK rewards. SPK is Sky’s first Star Token, part of its expanding DeFi ecosystem. This update attracted over $950 million in USDS deposits within weeks.
What this means: This is positive for SKY because it increases the use of USDS and locks more value into the platform. With over $3 billion in total value locked (TVL) in Sky Savings Rate, the protocol’s revenue potential grows.
(Source)
3. Tokenized CLO Integration (July 2025)
Overview: Sky added Grove as a Star token, deploying $1 billion into a tokenized Collateralized Loan Obligation (CLO) strategy through Centrifuge. This update supports institutional-grade credit markets and marks the first tokenized CLO in DeFi. It broadens Sky’s exposure to real-world assets (RWA).
What this means: This is a strong positive for SKY because it attracts institutional investors and diversifies the types of collateral backing the protocol, reducing dependence on volatile cryptocurrencies.
(Source)
Conclusion
Sky’s recent updates highlight a commitment to stronger governance, expanding DeFi products, and bringing institutional real-world assets into the ecosystem. With ongoing compliance efforts (like the GENIUS Act-ready USDH proposal) and daily buybacks of $250,000, SKY aims to maintain long-term stability. The key question remains: how will Sky balance decentralization with growing institutional involvement as it continues to scale?
Why did the price of SKY fall?
Sky (SKY) dropped 3.68% in the last 24 hours, underperforming the overall crypto market, which was up slightly by 0.11%. The main reasons for this decline are:
- Pressure from MKR Conversion Deadline – Investors rushed to swap MKR tokens for SKY before penalties kicked in, increasing supply.
- Technical Weakness – SKY’s price fell below important moving averages, indicating a bearish trend.
- Shift in Market Sentiment – Investors moved away from altcoins like SKY as Bitcoin gained dominance.
Deep Dive
1. MKR-to-SKY Conversion Rush (Negative Impact)
Overview: Sky’s governance set a 1% penalty starting September 22 for anyone delaying the swap from MKR to SKY tokens (The Block). As of September 19, over $316 million worth of MKR (about 176,070 tokens) had not yet been converted, creating a rush to swap before penalties increased.
What this means: Because the conversion rate is fixed at 1 MKR to 24,000 SKY, many holders swapped quickly, increasing the number of SKY tokens in circulation. This sudden increase in supply put downward pressure on the price.
What to watch: Whether the remaining 19% of MKR tokens convert smoothly after the deadline or if delayed conversions cause more selling pressure.
2. Technical Breakdown (Bearish Signal)
Overview: SKY is currently trading at $0.0652, which is below its 7-day simple moving average (SMA) of $0.0676 and 30-day SMA of $0.0706. The Relative Strength Index (RSI) is at 43.4, indicating weak momentum, and the MACD histogram shows bearish divergence.
What this means: Falling below these key averages likely triggered automatic sell orders and algorithmic trading, pushing the price down further. The next support level to watch is around $0.0665, near the Fibonacci 78.6% retracement level.
3. Altcoin Sentiment Cool-Off (Mixed Impact)
Overview: The Altcoin Season Index dropped 14.1% this week to 67, while Bitcoin’s market dominance increased to 57.71% (CoinMarketCap data).
What this means: As Bitcoin gains strength, investors tend to move funds away from smaller altcoins like SKY. This shift caused SKY’s 24-hour trading volume to fall 34.7% to $19.9 million, indicating less trading activity and liquidity.
Conclusion
The recent drop in SKY’s price is due to a mix of increased token supply from MKR conversions, technical selling pressure, and a general cooling in altcoin demand. While the MKR conversion deadline is a short-term factor, the weak technical signals suggest investors should be cautious.
Key point to watch: Will SKY hold the $0.0665 support level, or will delayed MKR conversions after September 22 lead to further losses?