Why did the established DeFi protocol MakerDAO change its name to Sky? An analysis of the changes brought about by its rebranding

MakerDAO, the DeFi lending protocol built on Ethereum back in 2014, has a large user base and high recognition in the cryptocurrency space. Its stablecoin DAI currently ranks third in the stablecoin market, following USDT and USDC, with a market capitalization of $5.36 billion.

On August 27, MakerDAO announced its rebranding to Sky Protocol and made significant upgrades to its governance token MKR and stablecoin DAI. This includes MKR upgrading to the new governance token SKY, while DAI will upgrade to the new stablecoin USDS (Sky Dollar).

MakerDAO's official Twitter (X) has also been renamed to Sky:

As a leading veteran DeFi lending protocol, why did MakerDAO change its name to Sky? This article will introduce the changes brought about by this upgrade and the significance behind it.

What major changes will the rebranding of MakerDAO to Sky bring?

Governance Token: Switching from MKR to SKY

Every 1 MKR can be exchanged for 24,000 SKY tokens. This ratio is fixed, meaning that MKR holders will receive the corresponding amount of the new governance token SKY after the conversion. As of the time of publication, the price of MKR is approximately 1913 USDT, corresponding to a split price of SKY at 0.0797 USDT.

Stablecoin: Switching from DAI to USDS

DAI and USDS will maintain a 1:1 exchange ratio, ensuring continuity in the value of the stablecoin. Users can choose to directly exchange DAI for USDS. Additionally, users can seamlessly exchange for USDS using ETH, USDC, or USDT on the official website, with exchanges starting on September 18.

It is noteworthy that the upgraded USDS will have a freezing function, which was not available with DAI. This also means that USDS adds some centralized features on top of its decentralized foundation. In cases of transfer errors or theft, users can seek assistance from MakerDAO (Sky) to freeze the relevant addresses.

Users Can Voluntarily Exchange

According to the official announcement, this token upgrade is based on a voluntary principle. Users can choose whether to convert their MKR and DAI into the new tokens. This gives community members more options. For users holding MKR, their governance rights will remain intact after converting to SKY. Sky promises that the new governance model will be more efficient and transparent. Furthermore, DAI and MKR will remain in circulation, and the new tokens will coexist.

Additionally, to encourage more user participation, the team has introduced a reward mechanism: users who complete the token migration during the beta period will receive 1.25 times the rewards in SKY and USDS tokens.

Maker SubDAO Will Also Be Renamed to Sky Stars

As part of the rebranding, Maker SubDAO will be renamed to Sky Stars, maintaining its independence as a decentralized project and connecting to the Sky ecosystem through its unique business model and autonomy.

The first subDAO of this kind to launch is Spark, an open-source decentralized liquidity protocol that currently offers a 6% yield for users depositing DAI tokens while allowing users to borrow USDS at a 7% interest rate.

According to DefiLlama data, there are currently 443 DeFi lending protocols with a total locked value (TVL) exceeding $31.3 billion, ranking second only to liquid staking protocols.

Among these 443 lending protocols, Spark currently ranks third, with a total locked value (TVL) of $2.43 billion, having decreased nearly 24% in the past month. Aave remains the leading DeFi lending protocol, with a total locked value of $11.15 billion, having decreased by over 16% in the past month.

Why Did MakerDAO, Operating for Ten Years, Change Its Name?

Rune Christensen, co-founder of MakerDAO, stated in a recent interview that this rebranding is a key step in "the next evolution of DeFi." The construction of Sky Protocol focuses on simplicity and usability, enabling users to enjoy innovative features such as Sky Token Rewards (STRs) and Sky Savings Rates (SSR) within eligible jurisdictions.

Firstly, with the increasingly stringent regulatory environment, especially in the United States, decentralized stablecoins face unprecedented challenges. To address these challenges, MakerDAO needs to reposition itself. Changing its name to Sky can help the project gain greater flexibility in the new regulatory environment, avoiding the limitations imposed by its previous identity.

Secondly, the name change is not just a branding shift; it represents a comprehensive overhaul of the underlying technological architecture. MakerDAO plans to enhance the overall performance of the protocol by improving smart contracts, optimizing governance mechanisms, and increasing the system's scalability. Adopting a completely new brand image is essential to reflect this thorough technological transformation.

Thirdly, to attract a broader user base, especially those who are less familiar with cryptocurrencies, simplifying brand recognition is crucial. The original name "MakerDAO" may seem complex and difficult to understand for outsiders, while "Sky" is simpler and more memorable, aiding in the wider promotion and adoption of the stablecoin.

In summary, changing the name to Sky not only helps MakerDAO adapt to regulatory and technological changes but also effectively expands its user base. Through this series of transformations, Sky Protocol aims to lead the next wave of innovation and development in the DeFi space.