The native token of the Sky Protocol (SKY), formerly known as Maker, surged nearly 10% following the execution of a major governance proposal that enacted a multi-pronged strategy to tighten token supply and expand its ecosystem. The proposal, which passed on February 27 and was executed on March 2, introduced significant changes to the protocol's tokenomics and credit infrastructure.
A key change involved reducing the rate of new token issuance. The proposal "normalized" SKY staking emissions, setting the distribution at approximately 838.18 million tokens over the next 180 days. This represents a reduction of about 161.82 million tokens compared to the previous schedule, directly lowering dilution pressure on the token.
Simultaneously, an automated buyback program is actively removing tokens from circulation. Funded with the protocol's USDS stablecoin, the system has spent roughly $114.5 million to repurchase about 1.83 billion SKY tokens so far. The program executes small transactions of around $10,000 throughout the day, creating a steady market bid and is currently removing roughly 3.6 million SKY tokens from circulation daily. Combined with the staking adjustments, this has tightened effective supply, with data indicating roughly 67% of SKY is currently staked.
The governance update also approved new credit infrastructure, onboarding two new "Launch Agents" to deploy credit and manage liquidity for the expanding USDS stablecoin ecosystem.
This shift reflects a broader industry trend where DeFi protocols are moving away from inflation-heavy models toward mechanisms that tie token value directly to protocol activity. Examples include Hyperliquid (HYPE) using fees for buy-and-burns, Solana's Jupiter (JUP) eliminating net new emissions in 2026, and dYdX allocating 75% of protocol revenue to token buybacks.
