On August 27th, MakerDAO announced a rebranding to Sky Protocol and the launch of a new stablecoin, USDS, along with a governance token, SKY.
According to the official description, the existing MKR and DAI tokens will be upgraded to the new SKY and USDS (Sky Dollar) tokens. The upgrade process follows these rules:
1. MKR to SKY Exchange:
Each MKR token can be exchanged for 24,000 SKY tokens. This ratio is fixed, meaning that MKR holders will receive a corresponding amount of the new governance token, SKY, after conversion.
2. DAI to USDS Exchange:
The exchange rate between DAI and USDS will remain 1:1. This ensures that for every DAI held, users can directly exchange it for 1 USDS, maintaining the continuity of the stablecoins value.
This token upgrade is voluntary. Users can choose whether or not to convert their MKR and DAI into the new tokens. MKR holders who convert to SKY will retain their corresponding governance rights. Sky Protocol has promised that the new governance model will be more efficient and transparent.
Additionally, Sky has provided a user-friendly migration tool to help users easily complete the conversion process from the old tokens to the new ones. To encourage token exchanges, the team has announced an additional reward mechanism. Users who complete the token migration during the beta period will receive 1.25 times the SKY and USDS tokens as a reward.
As of now, a total of 1,494 users have migrated their tokens.
Community Concerns About the Rebranding
The rebranding of MakerDAO has faced some criticism from the community, mainly for two reasons:
1. Questioning the Decentralization Principle:
The main concern is that once DAI becomes USDS, it will introduce a freezing function, similar to centralized stablecoins like USDT and USDC. Additionally, the Sky Protocol websites frontend seems to be blocking certain regions and banning the use of VPNs for login.
2. Impact on Existing Brand Value:
MakerDAO has been a leading project in the stablecoin sector, and this “sudden” rebranding, along with the official account not being properly managed, has led users to question whether the brand value has been compromised.
The Fundamental Reason for Rebranding
MakerDAO co-founder Rune Christensen mentioned earlier in “Reconciling the two opposing paths for Decentralized Stablecoins” & “PureDai: Returning to the ideological roots of Dai” that it is impossible to simultaneously achieve pegging to the USD, maintaining pure decentralization, and scaling up, as these three objectives present a trilemma.
There are two main approaches to solving the stablecoin trilemma:
1. Prioritize practicality and scalability by choosing USD pegging and real-world asset collateralization.
2. Pursue pure decentralization, advancing in both directions simultaneously.
Sky Protocol has chosen to address both directions simultaneously through the Endgame plan.
Therefore, this rebranding is not a spur-of-the-moment decision but the result of careful consideration.