What could affect the price of SKY?
Sky’s price is caught between strong buyback efforts and challenges in adoption.
- Buybacks & Scarcity – Over $77 million spent buying back SKY tokens, reducing the total supply
- Migration Penalty – MKR holders must convert to SKY by September 2025 or face a 1% penalty every quarter
- Layer-2 Expansion – SkyLink’s integration with Base and Arbitrum networks could increase the use of USDS stablecoin
Deep Dive
1. Buybacks & Scarcity (Positive for Price)
Overview:
Since July 2025, Sky Protocol has spent more than $77 million buying back 1.12 billion SKY tokens, which is about 4.8% of all SKY in circulation. These buybacks happen through daily auctions and are funded by the protocol’s revenue, as outlined in the Sky Atlas.
What this means:
By buying back tokens, the protocol reduces the number of SKY available for sale, which can support the price and show confidence in the token’s value. However, despite these efforts, the price dropped 21% over 30 days, indicating that buybacks alone may not be enough to drive demand. Larger buybacks or new ways to increase interest in SKY might be needed.
2. Migration Penalty Timeline (Potential Risk)
Overview:
Holders of MKR tokens have until September 22, 2025 to convert their MKR to SKY without penalty. After this date, any MKR not converted will lose 1% of its value every quarter. This rule encourages holders to upgrade but could lead to selling pressure if many try to exit late.
What this means:
While 81% of MKR has already been converted, about 176,000 MKR tokens (worth $316 million) remain unconverted. If these holders rush to sell SKY after penalties begin, it could push prices down (The Block).
3. Layer-2 Growth via SkyLink (Mixed Effects)
Overview:
SkyLink connects SKY and USDS tokens on Ethereum to Layer-2 networks like Base and Optimism, which offer cheaper transaction fees. USDS on Solana has already grown to over $50 million in total value locked (TVL), with annual yields above 12% (Sky Ecosystem).
What this means:
Expanding to these more affordable networks could increase USDS usage, which supports SKY’s governance value. However, competition from other Layer-2 stablecoins like Ethena’s USDe may limit how much growth is possible.
Conclusion
The future of SKY depends on how well buybacks can support the price amid migration penalties and Layer-2 adoption challenges. The 200-day moving average price ($0.072) is an important level to watch. A key question remains: will protocol revenue continue to fund buybacks if USDS growth slows?
What are people saying about SKY?
The Sky (SKY) community is divided between optimism about buybacks and concerns over credit ratings. Here’s what’s trending:
- Weekly buybacks have burned over 17 million SKY tokens, reducing the total supply
- Coinbase listing has raised hopes for wider adoption
- S&P’s B- credit rating highlights risks related to centralization
- Institutional activity includes Grove’s $1 billion investment in tokenized CLOs
Deep Dive
1. Buyback Program Keeps Building Confidence
Sky’s official account reported:
"1.39 million USDS spent last week to buy back 17.32 million SKY"
This is a positive sign for SKY because the protocol has removed about 3.28% of the total token supply so far this year. By reducing the number of tokens available, it creates scarcity, which can support the token’s value. Meanwhile, the project’s revenue remains strong, above $100 million annually.
2. Partnership with Hyperliquid Sparks Optimism
Crypto analyst @CryptoPatel shared:
"4.85% yield on USDH stablecoin + $25 million commitment to grow DeFi"
This partnership is encouraging for SKY because it expands the use cases for Sky’s stablecoin ecosystem. More utility could increase demand for SKY tokens. However, there are still risks involved in successfully executing these plans.
3. Coinbase Listing Adds Liquidity but Impact Is Limited
Sky announced:
"SKY/USD trading now live on Coinbase"
While being listed on Coinbase improves access to SKY tokens, the trading volume remains low—only about $10.1 million in 24 hours, which is less than 1% of the total market value. This suggests that trader interest has been modest since the listing.
4. Institutional Investment via Grove Is a Mixed Signal
Sky’s account noted:
"$1 billion allocation to tokenized CLOs via @centrifuge"
This move brings traditional financial assets onto the blockchain, which could increase the use of Sky’s stablecoin, USDS. However, the current Sky Savings Rate of 4.5% is lower than some competitors, like Mountain Protocol’s 5.2% USDM, which may limit its attractiveness.
Conclusion
Overall, opinions on SKY are mixed. The aggressive buyback strategy is seen as a strong positive for the token’s economics, but concerns remain about credit risks and how quickly adoption will grow. Keep an eye on the MKR to SKY token conversion rate ahead of September’s penalties: about 82% of MKR tokens have been converted, which means much of the selling pressure may have passed, but 174,000 MKR tokens (worth around $323 million) are still unconverted.
What is the latest news about SKY?
Sky is making moves to attract institutional investors and boost demand through token buybacks, all while adjusting its governance.
- S&P Rates USDS Stablecoin (October 14, 2025) – Sky’s USDS stablecoin is now part of S&P’s real-time risk ratings using Chainlink technology.
- $1.4 Billion in Token Buybacks (October 17, 2025) – Sky is among the top crypto projects buying back tokens to support its price.
- Binance Expands SKY Services (September 17, 2025) – SKY token is now available for margin trading, earning interest, and easy conversions on Binance.
Deep Dive
1. S&P Global Onchain Risk Scores (October 14, 2025)
What happened: S&P Global teamed up with Chainlink to provide transparent, onchain risk ratings for stablecoins, including Sky’s USDS. These ratings range from 1 to 5 and assess factors like the quality of backing assets, liquidity, and regulatory compliance. USDS earned a solid 4 out of 5, labeled “constrained” because it offers a 4.75% yield but partly depends on some volatile crypto assets as collateral.
Why it matters: This rating helps DeFi users and investors understand the risks of USDS better. However, the “constrained” rating suggests Sky might need to diversify its reserves or improve liquidity to attract more institutional investors. (S&P Global)
2. Hyperliquid Leads $1.4 Billion Buyback Trend (October 17, 2025)
What happened: Sky Protocol has spent $77 million this year buying back 1.12 billion SKY tokens, which is about 3.28% of the total supply. These buybacks have picked up since the project rebranded, averaging $250,000 daily through a decentralized system funded by protocol revenue.
Why it matters: Buying back tokens reduces the supply, which can help support the price after SKY dropped 30% over the past 90 days. However, the success of this strategy depends on the protocol continuing to generate revenue from lending and stablecoin fees. Keeping an eye on its $100 million annual revenue is important. (Yahoo Finance)
3. Binance Deepens SKY Integration (September 17, 2025)
What happened: Binance expanded its support for SKY by adding it to margin trading, conversion, and earning products. This means users can borrow against SKY tokens and convert them without fees. This move followed SKY’s listing on Coinbase in July, which helped SKY’s price jump over 50% in the third quarter.
Why it matters: More exchange support means better liquidity and more ways to use SKY, but it can also increase price swings. SKY’s current trading volume is low relative to its supply, indicating that the market for SKY tokens is still somewhat thin. (Binance)
Conclusion
Sky is working to grow by offering attractive yields through USDS and buying back tokens, while facing regulatory and market challenges. Its focus on institutional DeFi, including partnerships like Grove’s $1 billion tokenized credit fund, could help stabilize demand over time. The key question remains: can SKY’s buyback program help shield it from the ups and downs of the broader crypto market?
What is expected in the development of SKY?
Sky’s development is progressing with these key milestones planned for late 2024:
- Decentralized Operations Platform – Production (Q4 2024) – Launching a robust system to increase transparency across the Sky ecosystem.
- Atlas Rulebook Editor Integration (Q4 2024) – Introducing a tool to simplify governance documentation and help plan future development.
- Powerhouse Spin-Off Activation (Q4 2024) – Spinning off Powerhouse as an independent part of the ecosystem.
In-Depth Look
1. Decentralized Operations Platform – Production (Q4 2024)
Overview:
This platform is nearly finished (92%) and involves updating core products like Fusion, Switchboard, and Connect with a fresh look. It will also launch SKY-branded dashboards that provide real-time tracking of finances and Real World Assets (RWA).
Why it matters:
This is positive for SKY because better transparency can attract larger, institutional users and build trust in the ecosystem’s data. The main risk is possible delays in integrating the final APIs needed for full functionality.
2. Atlas Rulebook Editor Integration (Q4 2024)
Overview:
Atlas is halfway done (50%) and focuses on creating a Notion-based editor to formalize governance rules. It also supports planning for 2025’s roadmap by linking documentation with on-chain governance processes.
Why it matters:
This is neutral for SKY at this stage. Improved governance could help decentralize decision-making, but its success depends on community involvement. With only 10% progress on 2025 planning, the long-term effects are still unclear.
3. Powerhouse Spin-Off Activation (Q4 2024)
Overview:
Currently 39% complete, this project involves setting up a legal entity, designing token economics, and bringing in outside clients. Recent progress includes a 70% increase in community engagement and 15% development of the token model.
Why it matters:
This is positive for SKY if it succeeds, as it could diversify revenue and reduce dependence on Sky’s main treasury. However, regulatory challenges and delays in setting up the Open Collaborative Framework (OCF) could slow progress.
Conclusion
Sky’s roadmap focuses on strengthening infrastructure and improving governance, though timelines may shift. The Powerhouse spin-off and Atlas integration have the potential to open new revenue opportunities, while the production platform aims to stabilize demand for SKY by enhancing its practical use.
How will SKY’s tokenomics evolve to balance staking rewards with ecosystem growth after 2024?
What updates are there in the SKY code base?
Sky’s latest updates focus on improving governance, token economics, and scaling its ecosystem.
- Core Simplification Proposal (July 24, 2025) – Making governance simpler to speed up partnerships with third-party projects.
- Delayed MKR-to-SKY Penalty (September 22, 2025) – Smart contract changes to encourage holders to convert old tokens before deadlines.
- Buyback Mechanism Tweaks (August 2025) – Adjustments to how SKY tokens are repurchased to support the token’s value.
Deep Dive
1. Core Simplification Proposal (July 24, 2025)
Overview: The Sky community suggested streamlining its governance system by removing unnecessary parts and standardizing how new projects (“Stars”) join the network.
What this means: This is positive for SKY because a simpler system can help the ecosystem grow faster by attracting more decentralized finance (DeFi) projects. However, if done too quickly, it might weaken security. (Source)
2. Delayed MKR-to-SKY Penalty (September 22, 2025)
Overview: A penalty starting at 1% (increasing every quarter) was added to smart contracts to encourage holders of the old MKR tokens to switch to SKY before the deadline.
What this means: This is neutral for SKY overall. It pushes holders to upgrade but could cause some short-term selling from those who resist the change. As of September 19, 2025, 82% of holders have completed the upgrade. (Source)
3. Buyback Mechanism Tweaks (August 2025)
Overview: Sky changed its buyback system to focus more on liquidity pools on Hyperliquid instead of Uniswap, increasing annual token repurchases from $36 million to $150 million.
What this means: This is good news for SKY because more buybacks can reduce selling pressure and support the token’s price. However, relying heavily on one exchange (Hyperliquid) carries some risk. So far, over 1.1 billion SKY tokens (about 3.2% of total supply) have been bought back. (Source)
Conclusion
Sky’s recent code updates show a clear focus on growing its ecosystem and encouraging institutional adoption of DeFi. The team is balancing growth efforts like simplifying governance and increasing buybacks with phasing out old tokens through penalties. The big question remains: will Hyperliquid’s strong liquidity be enough to support SKY’s deflationary token model during uncertain market conditions?
Why did the price of SKY fall?
Sky (SKY) dropped 0.93% in the past 24 hours, following a general crypto market decline of 1.05%. Over the last 30 days, SKY has fallen 21.36%. Here’s why:
- Weak Technical Signals – Key indicators show continued downward momentum.
- Migration Penalties Causing Sell-Offs – Delays in converting MakerDAO (MKR) tokens to SKY are leading to penalties, pushing holders to sell.
- Regulatory Challenges for Stablecoin USDS – New U.S. and Hong Kong rules increase compliance risks for Sky’s USDS stablecoin.
Deep Dive
1. Bearish Technical Momentum (Mixed Impact)
Overview: SKY is trading below important moving averages—the 30-day average price is about $0.066, and the 200-day average is around $0.072. The MACD indicator, which helps track momentum, is negative, showing ongoing selling pressure. The RSI, a measure of whether an asset is overbought or oversold, is at 39.53, suggesting the price is near oversold but not yet ready to bounce back.
What this means: Traders are selling because there are no strong signs of a price increase. The price faces resistance near $0.068, and if it falls below $0.057, losses could worsen.
What to watch: If SKY closes above the 7-day moving average (~$0.061), it could signal short-term relief.
2. Token Migration Sell Pressure (Bearish Impact)
Overview: When Sky rebranded from MakerDAO (MKR), holders were supposed to convert their MKR tokens to SKY at a rate of 1:24,000. After September 22, 2025, late conversions face a 1% penalty that increases every quarter. There’s still over $323 million worth of MKR tokens unconverted, according to Yahoo Finance. This is pushing holders to sell SKY to avoid penalties.
What this means: These penalties are causing extra selling pressure, especially since SKY’s trading volume is low (only 0.84% turnover), making the market more sensitive to big sales.
Key metric: Watch for spikes in SKY token inflows on exchanges, which can be tracked via the Sky Risk Dashboard.
3. Regulatory Risks for USDS Ecosystem (Bearish Impact)
Overview: Sky’s USDS stablecoin, with a market cap of $4.8 billion, is facing new regulations. The U.S. GENIUS Act bans paying interest on stablecoins, and Hong Kong’s Stablecoin Ordinance requires full identity verification (KYC) on the blockchain. Some platforms like Coinbase offer “rewards” as a workaround, but compliance costs could reduce Sky’s revenue, which is estimated at $100 million per year.
What this means: Regulatory uncertainty may discourage big investors from using USDS, which could reduce demand for SKY tokens. Additionally, S&P’s B- credit rating (Yahoo Finance) raises concerns about the project’s credibility.
Conclusion
SKY’s recent decline is due to weak technical signals, selling pressure from token migration penalties, and regulatory challenges around its stablecoin USDS. Although buybacks totaling $78.8 million this year provide some support, recovering above $0.06 depends on overall market conditions and clearer regulatory guidance for USDS.
Key watch: Can SKY hold above its pivot point at $0.05918 while Bitcoin maintains dominance at nearly 59%? Keep an eye on SKY and USDS liquidity on major exchanges, especially after migration penalties take full effect.