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Why did the price of SKY go up?

Sky (SKY) increased by 2.62% in the last 24 hours, outperforming the overall crypto market, which dropped slightly by 0.14%. However, the coin still shows some downward pressure over the past week (-3.9%) and month (-15.05%). Here are the main reasons behind this movement:

  1. S&P-Chainlink Partnership (Positive Impact)
    Real-time risk scores for stablecoins helped boost confidence in Sky’s USDS stablecoin.
  2. BitFlyer Exchange Listing (Positive Impact)
    SKY became more accessible to investors in Japan, driving demand ahead of the October 8 listing.
  3. Buyback Program (Positive Impact)
    The Sky protocol spent about $1.4 million USDS weekly to buy back SKY tokens, reducing the total supply.

In-Depth Analysis

1. S&P-Chainlink Stablecoin Ratings (Positive Impact)

What happened:
S&P Global Ratings teamed up with Chainlink to provide on-chain stability ratings for 10 stablecoins, including Sky’s USDS and DAI (S&P Global). These ratings assess factors like asset quality, liquidity, and regulatory compliance.

Why it matters:
USDS received a strong, institutional-level rating, which helps ease concerns about the stability of its $4.8 billion market cap. This, in turn, supports the value and utility of SKY, which is the governance token for USDS.

What to watch:
How decentralized finance (DeFi) platforms, like Spark Protocol (which manages over $3 billion in Sky-related assets), adopt these S&P ratings.

2. BitFlyer Exchange Listing (Positive Impact)

What happened:
BitFlyer, Japan’s largest cryptocurrency exchange, announced that SKY will be listed starting October 8 (CoinDesk Japan).

Why it matters:
This listing gives retail investors in Japan easy access to SKY, increasing trading volume and liquidity. New exchange listings often lead to short-term price jumps due to increased interest and trading activity.

What to watch:
If daily trading volume stays above $5 million after the listing, it would indicate strong, ongoing demand.

3. Buyback Program & Technical Signals (Mixed Impact)

What happened:
Sky Protocol repurchased 16.9 million SKY tokens last week, spending about $1.07 million and reducing the total supply by 3.2% (1.12 billion SKY tokens removed) (Sky Ecosystem). At the same time, SKY’s price moved back above its 30-day simple moving average ($0.0673), suggesting some short-term positive momentum.

Why it matters:
The buyback helps offset token dilution caused by conversions from MKR to SKY (which is 56% complete). However, the Relative Strength Index (RSI) at 44.5 indicates neutral market sentiment—not strongly oversold or overbought.

Conclusion

Sky’s recent price increase is driven by strategic developments like the S&P validation and BitFlyer listing, along with the protocol’s buyback efforts. However, broader market challenges remain, with Bitcoin dominance at 58.57%.

Key point to watch: Can SKY maintain its price above $0.064 (the 200-day exponential moving average) if market sentiment worsens, as indicated by the Fear & Greed Index currently at 37?


What could affect the price of SKY?

Sky (SKY) is currently balancing between upgrading its protocol and competing with other stablecoins in the market.

  1. Buyback Program – Over $80 million spent to reduce the number of SKY tokens available, which could limit supply and support prices.
  2. Migration Penalty – Starting after a September upgrade, fees may encourage holders of MakerDAO’s MKR tokens to convert to SKY faster.
  3. Stablecoin Competition – USDS, Sky’s stablecoin, offers a 4.5% yield but is behind popular stablecoins like Tether and USDC in adoption.

Deep Dive

1. Protocol Buybacks & Supply Dynamics (Positive Outlook)

Sky Protocol has bought back about 3.28% of all SKY tokens in circulation—roughly 1.12 billion tokens—using revenue from its stablecoin, USDS. This buyback program spends around $1.4 million each week and is planned to continue until at least early 2026 (Sky Atlas).

What this means: By reducing the number of tokens available for sale, the buyback could help support or increase SKY’s price, especially if it outpaces the number of new tokens created as staking rewards. However, this depends on how widely USDS is adopted. Currently, USDS has a $7.5 billion supply, which is much smaller compared to Tether’s $176 billion.

2. MakerDAO Migration Cliff (Mixed Impact)

About 44% of MakerDAO’s MKR tokens have not yet been converted to SKY ahead of a penalty starting September 22, 2025. This penalty will reduce the value of unconverted MKR by 1% every quarter. Some exchanges like Binance have already completed automatic swaps, but around 176,000 MKR tokens (worth about $316 million) held in inactive wallets could face dilution.

What this means: The forced conversion could increase the number of SKY tokens in circulation and boost participation in governance decisions in the short term. However, if many MKR holders sell their SKY tokens quickly, it could put downward pressure on the price. Also, the conversion rate (1 MKR to 24,000 SKY) makes it tricky to compare prices historically.

3. Stablecoin Yield Competition (Challenges Ahead)

USDS offers a 4.5% savings rate, which is lower than some competitors like Ethena’s USDe at 10.86% and PYUSD. Additionally, a recent S&P stability score gave USDS and DAI a 3 out of 5 rating, citing concerns about centralized governance (Chainlink integration).

What this means: For USDS to grow beyond its current $4.35 billion market cap, it needs to be listed on more exchanges—it’s currently available on 38 exchanges compared to Tether’s 100+. If demand for USDS remains weak, the protocol’s revenue—and by extension, SKY’s value—could suffer.

Conclusion

The future of SKY depends on successfully rolling out its “Endgame” rebranding and defending USDS against stronger stablecoin competitors. Keep an eye on how quickly MKR holders convert their tokens after September and whether USDS can increase its liquidity to match bigger players like Tether. The key question is whether Sky’s governance improvements can keep pace with the growing competition in the stablecoin market.


What are people saying about SKY?

Sky's community is energized by ongoing buybacks and upcoming exchange listings, but concerns about centralization remain. Here’s the latest:

  1. Weekly buybacks of $1.39 million have removed over 17 million SKY tokens
  2. Migration from MKR to SKY is over halfway done, with 56% converted
  3. Listings on Coinbase and Bybit are boosting hopes for better liquidity

Deep Dive

1. Buyback Activity Grows — Positive Signal

Sky’s official account reported spending $1.39 million last week to buy back 17.32 million SKY tokens, removing about 3.28% of the total supply so far. Since the buyback program began, over 1.1 billion SKY tokens have been taken out of circulation. This creates scarcity, which can support the token’s value. However, SKY’s price is still 28% below its June peak of $0.088.
Source: @SkyEcosystem

2. Technical Signs Point to Possible Price Recovery — Positive Signal

A crypto trader noted that SKY recently formed a bullish engulfing candle pattern on the daily chart, which often signals a potential price rebound. The token is testing its 21-day exponential moving average (EMA), a key technical level. If it holds, SKY could climb back toward $0.088. Despite a 17% drop over the past month, the Relative Strength Index (RSI) remains neutral at 41, suggesting the price isn’t oversold or overbought.
Source: @mkbijaksana

3. Credit Rating Highlights Governance Concerns — Negative Signal

S&P Global assigned a “B-” credit rating to Sky, citing risks related to centralization and liquidity. The report points out that the project’s founder controls 9% of governance power, which raises concerns about decision-making concentration. This is the first major credit rating for a decentralized finance (DeFi) protocol like Sky. The Sky team has challenged the rating’s methodology.
Source: S&P Global report

Conclusion

The outlook for SKY is mixed. On one hand, buybacks and new exchange listings are positive signs that could support price growth. On the other hand, governance risks and a cautious market environment (CMC Fear Index at 37) create uncertainty. Keep an eye on whether SKY holds above the 21 EMA level around $0.065 this week, especially with migration deadlines and penalties coming up on September 18.


What is the latest news about SKY?

Sky is managing challenges after its token migration while gaining support from institutions, and its stablecoin USDS is becoming more transparent about risks.

  1. S&P Rates USDS Stablecoin (October 14, 2025) – S&P Global uses Chainlink technology to provide risk scores for USDS.
  2. MKR-to-SKY Penalties Start (September 22, 2025) – Users who delay switching from the old MKR token to SKY face a 1% penalty every three months to encourage faster migration.
  3. BitFlyer Lists SKY (October 8, 2025) – The Japanese exchange BitFlyer adds SKY, increasing access in the Asia-Pacific region.

In-Depth Look

1. S&P Rates USDS Stablecoin (October 14, 2025)

What happened: S&P Global teamed up with Chainlink to offer real-time risk scores for 10 stablecoins, including Sky’s USDS. These scores look at factors like the quality of assets backing the coin, how easy it is to redeem, and compliance with regulations. USDS received a 4 out of 5 rating, labeled “constrained,” mainly because its governance is somewhat centralized. Despite this, USDS is recognized as a top-5 stablecoin with a market value of $4.81 billion.
Why it matters: This is a neutral development for Sky. Having institutional-level risk scores could attract more cautious investors, but the “constrained” rating points out that USDS still has some risks related to how it’s managed. (S&P Global)

2. MKR-to-SKY Penalties Begin (September 22, 2025)

What happened: Sky started charging a 1% penalty every quarter to users who haven’t yet converted their old MakerDAO MKR tokens to the new SKY tokens. So far, over 81% of MKR tokens have been converted, but about $316 million worth remain. These penalties will increase every three months to encourage full migration.
Why it matters: This is positive for SKY because it reduces the number of old tokens in circulation and helps unify governance under SKY, which can make the system more efficient. However, some holders might sell their tokens quickly to avoid penalties, which could cause short-term price pressure. (The Block)

3. BitFlyer Lists SKY (October 8, 2025)

What happened: BitFlyer, a major Japanese cryptocurrency exchange, added SKY trading pairs with the Japanese yen (JPY). This gives SKY access to over 2.8 million users in Japan and the broader Asia-Pacific region. This listing follows Sky’s earlier addition to Coinbase in July 2025 and fits with their plan to grow in Asia.
Why it matters: This is a strong positive for SKY, as it improves liquidity (ease of buying and selling) and opens the door to more retail and institutional investors in a key market.

Conclusion

Sky is navigating the challenges that come with moving from the old MKR token to SKY, while also scoring important wins like the S&P risk rating and BitFlyer listing. USDS offers a competitive 4.75% yield and holds a $4.8 billion market cap, making it a significant player in decentralized finance (DeFi). However, the centralized nature of its governance remains something to watch. The big question is whether Sky’s growing partnerships with institutions can overcome the risks tied to its MakerDAO origins.


What is expected in the development of SKY?

Sky’s roadmap is focused on growing its ecosystem and improving governance.

  1. Powerhouse Spin-off (Q4 2024) – Making Powerhouse an independent part of the ecosystem.
  2. Atlas Rulebook Editor (Q4 2024) – Simplifying the documentation of governance rules.
  3. Delayed Upgrade Penalty (September 18, 2025) – Encouraging MKR holders to switch to SKY tokens.

In-Depth Look

1. Powerhouse Spin-off (Q4 2024)

What’s happening:
Sky is turning Powerhouse, a decentralized operations platform, into its own independent entity. So far, about 39% of the work is done, including setting up the legal structure, designing token economics, and engaging the community.

Why it matters:
This move could be very positive for SKY because it may create new revenue opportunities and attract outside projects. However, if there are delays in legal setup or token design, it could slow progress.

2. Atlas Rulebook Editor (Q4 2024)

What’s happening:
Sky is developing a tool called the Atlas Rulebook Editor to clearly define its governance rules. The document is about 85% complete, and plans to integrate it into the system are underway for 2025.

Why it matters:
This is generally positive because clearer governance can encourage more institutional investors to participate. But the technical challenges might slow down how quickly it’s adopted.

3. Delayed Upgrade Penalty (September 18, 2025)

What’s happening:
Starting September 18, 2025, MKR token holders who haven’t upgraded to SKY will face a 1% penalty that increases every quarter. More details are available in the upgrade timeline.

Why it matters:
This is good for SKY’s liquidity because it motivates MKR holders to switch over. On the flip side, if penalties cause holders to sell off their tokens quickly, it could have a negative impact.

Conclusion

Sky’s roadmap aims to make its ecosystem more flexible and governance clearer. The success depends on how well technical updates are delivered and how the market reacts. The Powerhouse spin-off could open doors for new partnerships, but any delays might slow down momentum.


What updates are there in the SKY code base?

Sky’s software updates focus on enforcing penalties for delayed governance migration and simplifying the protocol to improve efficiency.

  1. Delayed Upgrade Penalty (Sept 18, 2025) – A 1% penalty applies to MKR-to-SKY conversions after this date, increasing every three months.
  2. Core Simplification Process (July 24, 2025) – A proposal to streamline the protocol by removing outdated components.
  3. Staking Engine Activation (May 29, 2025) – SKY holders can now earn USDS rewards by staking their tokens.

Deep Dive

1. Delayed Upgrade Penalty (Sept 18, 2025)

Overview: Sky introduced a penalty to encourage MKR holders to switch to SKY tokens sooner. Starting September 18, 2025, converting MKR to SKY will incur a 1% penalty, which increases by 1% every three months after that.

This change updates the governance smart contracts to automatically reduce the conversion rate over time. For example, before penalties, 1 MKR might convert to 24,000 SKY, but after penalties, it could drop to as low as 0.78 SKY. The system requires node operators to keep their software up to date to enforce these rules.

What this means: This move is neutral for SKY overall. It helps centralize governance under SKY but may discourage MKR holders who delay upgrading. The penalties could reduce the number of people selling SKY after late conversions.
(Source)

2. Core Simplification Process (July 24, 2025)

Overview: A community-driven proposal aims to simplify the Sky protocol by removing old, unnecessary modules and speeding up the growth of the “Star” ecosystem.

While technical details are limited, this likely involves retiring outdated smart contracts and making core functions like USDS token creation more efficient, which could lower transaction costs.

What this means: If done well, this is positive for SKY. It could make the system faster and cheaper to use. However, there is some risk that the transition could cause temporary disruptions.
(Source)

3. Staking Engine Activation (May 29, 2025)

Overview: The new Staking Engine allows SKY holders to earn USDS rewards based on the protocol’s revenue.

Updates to the code enable real-time reward payments and allow stakers to delegate their governance rights. Half of the protocol’s revenue is now shared with stakers, requiring changes to how fees are distributed.

What this means: This is a positive development for SKY holders, as it aligns their interests with the success of the protocol. By June 2025, over $568 million worth of SKY tokens had been staked.
(Source)

Conclusion

Sky’s updates focus on enforcing governance migration through penalties and improving efficiency by simplifying the protocol. The September 18 penalty deadline is important for MKR holders considering conversion. Meanwhile, ongoing improvements aim to support wider adoption of USDS. It will be interesting to see how developer activity evolves after the migration.