Why did the price of SKY fall?
Sky (SKY) dropped 9.46% in the last 24 hours, performing worse than the overall crypto market, which fell 8.57%. The main reasons:
- Market-wide selloff – The crypto fear index reached 35, indicating "Fear," and Bitcoin’s market share increased to 59.77% as investors moved money away from alternative coins.
- Technical breakdown – SKY’s price fell below important moving averages ($0.0668 for 7-day average, $0.0697 for 30-day average), triggering automatic sell orders.
- MKR conversion pressure – About 19% of old MKR tokens (worth $323 million) still need to be converted to SKY before a penalty deadline on September 22, creating selling pressure.
Deep Dive
1. Market Challenges (Negative Impact)
Overview:
The total value of all cryptocurrencies dropped 8.57% to $3.78 trillion. Alternative coins (altcoins) were hit the hardest, with their performance index down 37.7% over the week. Bitcoin’s dominance rose to 59.77% as investors sought safer assets.
What this means:
SKY’s 9.46% drop fits the pattern of investors avoiding riskier assets. Its price movement is closely linked to Ethereum (ETH), with a 30-day correlation of 0.89, making it sensitive to overall market trends. The Fear & Greed Index at 35 shows traders are selling off in anticipation of possible impacts from a U.S. government shutdown.
2. Technical Breakdown (Bearish Momentum)
Overview:
SKY’s price fell below its 7-day and 30-day simple moving averages (SMA), which are key indicators traders watch ($0.0668 and $0.0697 respectively). The Relative Strength Index (RSI) at 38.01 signals downward momentum, and the MACD indicator confirms selling pressure.
What this means:
Many traders likely sold their SKY holdings after these technical signals, especially since trading volume is relatively low (turnover ratio 7.2% compared to Bitcoin’s 15.3%). The next price support level is at $0.0641, based on a common technical analysis tool called Fibonacci retracement.
What to watch:
If SKY stays below $0.0641, it could fall further toward its July low of $0.0589.
3. MKR Conversion Pressure (Mixed Impact)
Overview:
There are still 176,070 MKR tokens (worth $316 million) that haven’t been converted to SKY ahead of the September 22 deadline. After this date, unconverted MKR holders face a 1% penalty fee, which increases each quarter. Currently, 81% of MKR has been converted.
What this means:
While converting MKR reduces the supply of old tokens, it can cause selling pressure on SKY if holders sell their new SKY tokens immediately. The recent spike in 24-hour trading volume to $103 million (a 464% increase compared to the weekly average) suggests this selling is happening.
Conclusion
SKY’s recent price drop reflects broader market caution, technical selling signals, and selling related to MKR conversions. The protocol’s fundamentals remain strong, with over $7 billion in USDS supply and more than $1 billion in buybacks. However, short-term pressure may continue until the MKR conversion deadline passes and overall market sentiment improves.
Key point to watch: SKY’s ability to stay above $0.0614 before September 22. Falling below this level could lead to faster declines toward the lows seen in June.
What could affect the price of SKY?
SKY’s price is currently influenced by a mix of buybacks, staking rewards, and ongoing risks related to token migration.
- Token Migration Penalty – About 19% of MKR tokens haven’t been converted yet, which could increase supply if holders sell them all at once.
- $77M Buybacks – The protocol has bought back and burned 3.28% of SKY tokens, helping to reduce selling pressure.
- Solana Expansion – Keel’s $2.5 billion plan to grow on the Solana blockchain could increase the use of USDS and make SKY more valuable.
Deep Dive
1. MKR-to-SKY Migration Risks (Mixed to Bearish)
Overview: As of October 2025, around 176 million MKR tokens (worth about $316 million) have not yet been converted to SKY tokens. There’s a 1% penalty fee for delaying conversion, which increases every quarter. Some exchanges like Binance and Bitvavo have stopped MKR trading, but some holders might sell their SKY tokens after converting.
What this means: Since 81% of MKR tokens have already been converted, the immediate risk of too many tokens flooding the market is lower (The Block). However, if the remaining MKR holders convert and sell their SKY tokens all at once, it could put downward pressure on SKY’s price. The penalty fees encourage holders to convert gradually, which may help reduce sudden price swings.
2. Buybacks & Staking Rewards (Bullish)
Overview: Since July 2025, the Sky Protocol has spent $77 million buying back 1.11 billion SKY tokens, which is about 3.28% of the total supply. Staking SKY tokens offers an annual return of up to 14.47%, with around 947 million tokens (worth $77 million) currently locked in staking.
What this means: Buybacks reduce the number of tokens available for sale, while attractive staking rewards encourage holders to keep their tokens locked up for longer periods. This combination can help support the price. However, the Relative Strength Index (RSI) at 38 suggests there might be some short-term downward momentum.
3. Solana Integration & Regulatory Environment (Bullish)
Overview: Keel, a project focused on the Solana blockchain, plans to invest $2.5 billion into Solana’s decentralized finance (DeFi) ecosystem, which could increase the use of USDS and enhance SKY’s utility. Additionally, new U.S. regulations under the GENIUS Act limit certain yield strategies, making Sky’s 4.75% “Savings Rate” an attractive alternative.
What this means: Solana’s low transaction fees and fast processing could attract more users to USDS, indirectly increasing the value of SKY tokens used for governance. Clearer regulations also favor compliant and safer yield options like those offered by Sky, compared to riskier alternatives.
Conclusion
The future price of SKY depends on how well it balances the risks from remaining MKR token conversions with the positive effects of buybacks and growth on Solana. Keep an eye on the MKR conversion rate after penalty increases and Keel’s total value locked (TVL) on Solana. These factors will show whether the positive drivers can overcome lingering risks. Will SKY’s tokenomics outperform the overall market sentiment (CMC Fear & Greed Index: 35)?
What are people saying about SKY?
The Sky (SKY) community is working to balance reducing the token supply with growing its ecosystem. Here’s what’s happening right now:
- $1.4 million in weekly buybacks are reducing the number of SKY tokens available, even as prices fluctuate.
- 12.75% staking rewards are attracting holders, despite a general market downturn.
- Traders are watching a key support level at $0.088 after a failed attempt to break above $0.096.
- Institutional interest is growing, highlighted by SKY’s listing on Coinbase New York, which is boosting optimism.
In-Depth Look
1. Buybacks Reduce Supply, Supporting Price
The Sky protocol recently spent 1.39 million USDS (a stablecoin) to buy back 17.32 million SKY tokens, which is about 3.28% of the total supply. This steady buyback effort, averaging around $250,000 per day, helps reduce the number of tokens in circulation while increasing USDS reserves. This dual approach acts as a deflationary mechanism, potentially supporting the token’s value.
(Source: @SkyEcosystem on X)
2. Attractive Staking Rewards Keep Holders Engaged
Over 7 billion SKY tokens are currently staked, earning holders an annual percentage yield (APY) of 12.75%. This high reward rate encourages investors to hold their tokens long-term, even though SKY’s price has dropped about 27% over the past 60 days. This “sticky liquidity” helps maintain the protocol’s operations and stability.
(Source: @SkyEcosystem on X)
3. Technical Signals Show Mixed Outlook
Technical analysis points to a potential short-term rebound. A bullish engulfing candle pattern formed on the daily chart, suggesting a possible price recovery if the $0.088 support level holds. The target in this scenario is around $0.085, near the 21-day exponential moving average (EMA). However, the Relative Strength Index (RSI) is at 41, indicating neutral momentum after a 15% price drop in September.
(Source: @mkbijaksana on X)
4. Growing Institutional and Regional Adoption
SKY’s recent listing with Japanese Yen (JPY) and South Korean Won (KRW) trading pairs on Phemex expands its reach in Asian markets. The token’s 24-hour trading volume is $103 million, slightly down 9% from the previous day, but this still signals growing regional interest and adoption.
(Source: @PhemexR on X)
Conclusion
The overall outlook for SKY is cautiously optimistic. The community is balancing aggressive strategies like buybacks and high staking yields against a generally weak crypto market, which saw an 8.57% drop in total market capitalization over the last 24 hours. A key factor to watch is whether the protocol’s $80 million in cumulative buybacks can counteract selling pressure, especially from holders of MKR tokens facing penalties after September 18. With USDS supply reaching $7 billion and the Spark platform generating $226 million in annual revenue, SKY’s real challenge will be maintaining demand for its utility beyond just speculative trading.
What is the latest news about SKY?
Sky is advancing in yield innovation and adapting to regulatory changes while growing its ecosystem. Here’s the latest update:
- BitFlyer Listing (October 8, 2025) – SKY token is now available on Japan’s largest regulated crypto exchange.
- Institutional Support (October 4, 2025) – Brazil’s BTG Pactual names SKY as a top investment pick.
- Stablecoin Market Changes (October 3, 2025) – Sky’s stablecoin USDS is gaining market share as Tether (USDT) and USDC lose dominance.
In-Depth Look
1. BitFlyer Listing (October 8, 2025)
What happened: Sky’s token, SKY, was listed on BitFlyer, Japan’s biggest crypto exchange, on October 8. This move follows Sky’s rebranding from MakerDAO and aims to increase token availability and trading in regulated markets.
Why it matters: Being on BitFlyer exposes SKY to over 2.5 million users, potentially boosting demand and trading volume. Japan’s strict regulations also show that Sky meets high compliance standards, which can build investor confidence. (Yahoo Finance)
2. Growing Institutional Interest (October 4, 2025)
What happened: BTG Pactual, a major Brazilian investment bank, through its crypto division Mynt, named SKY a top token pick for October. They highlighted SKY’s attractive 4.75% savings rate and a $77 million buyback program. SKY is noted for its role in decentralized finance (DeFi) yield generation and tokenizing real-world assets.
Why it matters: Institutional backing can help stabilize SKY’s price, which has dropped nearly 28% over the past two months, by bringing in long-term investors. However, the reliance on buybacks raises questions about whether demand for SKY is growing naturally. (CoinDesk)
3. Changes in the Stablecoin Market (October 3, 2025)
What happened: USDS, Sky’s stablecoin, now has a market value of $4.81 billion, gaining ground as the dominance of USDT and USDC declines. New regulations like the U.S. GENIUS Act, which bans issuer-led yield programs, have increased demand for compliant yield options like Sky’s 4.75% savings rate.
Why it matters: The growth of USDS strengthens Sky’s overall ecosystem but faces competition from other stablecoins like Ethena’s USDe, which offers a higher yield of 10.86%. Additionally, compliance with Hong Kong’s Stablecoin Ordinance could put pressure on profit margins. (Cointribune)
Conclusion
Sky’s recent exchange listings and institutional endorsements show its focus on regulated market growth. Meanwhile, the rise of USDS highlights Sky’s position in the yield-focused stablecoin space. The key question remains: Can Sky’s buyback-driven token model hold up against market ups and downs, or will competitors like USDe challenge its appeal?
What is expected in the development of SKY?
Sky is making steady progress with these key milestones:
- Production Platform Launch (Q4 2024) – Completing the decentralized operations system.
- Atlas Rulebook Integration (Q4 2024) – Creating tools to manage governance and protocol rules.
- Powerhouse Spin-off (Q4 2024) – Spinning off a new independent part of the ecosystem.
- Governance Simplification (Ongoing) – Making governance easier to speed up growth.
Deep Dive
1. Production Platform Launch (Q4 2024)
Overview:
Sky’s decentralized operations platform is almost ready, with 92% of development done (Sky Fusion Roadmap). This platform brings together key products like Fusion (a transparency dashboard), Switchboard (a data API), and Renown (a reputation system).
What this means:
This is positive for SKY because it improves transparency and scalability, which could attract bigger, institutional users. However, there’s a risk of delays in finishing the technical parts like API integration.
2. Atlas Rulebook Integration (Q4 2024)
Overview:
The Atlas Rulebook Editor is halfway done and aims to put governance rules on the blockchain, replacing manual workflows done in Notion. It also helps identify gaps to plan for future improvements through 2025.
What this means:
This is somewhat positive because clearer governance can reduce confusion and speed up decisions. But it depends on how well the community adopts these new tools. Delays could slow down progress.
3. Powerhouse Spin-off (Q4 2024)
Overview:
Sky is working on spinning off a new independent entity, currently 39% complete. This involves setting up legal structures, designing token economics, and bringing in outside clients. Key goals include creating a decentralized pay system and growing the community.
What this means:
This is a high-risk, high-reward move. Independence could open new revenue streams but might also distract from Sky’s main focus if partnerships don’t work out.
4. Governance Simplification (Ongoing)
Overview:
The Sky Core Simplification Process (July 2025 update) aims to cut down on complex bureaucracy to help smaller sub-groups like Spark and Grove grow faster.
What this means:
This is good for the long term if it helps innovation move faster. But sudden changes could unsettle current community members.
Conclusion
Sky’s roadmap is focused on building a stronger infrastructure, improving governance, and expanding its ecosystem. Simplifying governance shows a clear shift toward sustainable, community-led growth.
Will these upgrades help SKY make the most of its $1.5 billion market cap and bounce back from a 23% drop over the last 60 days?
What updates are there in the SKY code base?
Sky’s recent software updates focus on moving governance fully to the SKY token, rewarding users who stake SKY, and penalizing those who delay upgrading from the old MKR token.
- Penalty for Delayed Upgrade (Starting Sept 18, 2025) – A 1% penalty applies to MKR-to-SKY conversions if holders delay upgrading, increasing every three months.
- Staking Rewards Begin (May 29, 2025) – SKY holders who stake their tokens started earning USDS rewards.
- Governance Upgrade Completed (May 19, 2025) – Voting power officially shifted entirely to SKY tokens, removing MKR voting rights.
In-Depth Explanation
1. Penalty for Delayed Upgrade (Sept 18, 2025)
What’s happening? MKR token holders who haven’t switched to SKY by this date now face a 1% penalty on their conversion. This penalty grows by 1% every three months to encourage a faster upgrade.
This penalty is built into Sky’s governance system and automatically adjusts how many SKY tokens you get when converting MKR. For example, before penalties, 1 MKR might convert to 24,000 SKY, but after the deadline, that number decreases. The goal is to phase out MKR completely by making delays costly.
Why it matters: This puts pressure on MKR holders to upgrade quickly. While it could cause some to sell their tokens in the short term, it should help stabilize governance participation over time.
(Source)
2. Staking Rewards Begin (May 29, 2025)
What’s happening? SKY holders who stake their tokens now earn rewards paid in USDS, a stablecoin. By July 2025, over $77 million worth of SKY was staked.
This was made possible by launching a new smart contract called the Staking Engine, which distributes rewards funded by the protocol’s revenue. Additionally, a new SPK token farming program was introduced for USDS suppliers, attracting over $500 million in USDS deposits within days.
Why it matters: This encourages users to hold and stake SKY long-term, increasing the token’s usefulness. However, since rewards come from the protocol’s revenue (around $100 million per year), there’s some risk if demand for USDS drops.
(Source)
3. Governance Upgrade Completed (May 19, 2025)
What’s happening? Sky executed a governance “spell” (a special update) that made SKY the only token with voting rights. MKR holders lost their ability to vote on protocol changes.
This change updated the core governance contracts so only SKY holders can propose or vote on upgrades. The move followed a vote on May 12 where MKR holders agreed to the transition.
Why it matters: This strengthens SKY’s role in the project and reduces influence from the older MKR token. However, low voter turnout in these polls is common and raises concerns about how decentralized the governance really is.
(Source)
Summary
Sky’s updates focus on moving governance fully to SKY, rewarding those who stake SKY, and discouraging delays in upgrading from MKR. These changes support Sky’s “Endgame” strategy to simplify and strengthen the protocol. While these moves are positive for adoption, keep an eye on potential MKR sell-offs before penalties kick in and whether SKY can maintain staking rewards if revenues fluctuate.
What will the long-term effects of Sky’s penalty system be on how decentralized its governance remains?