Sky governance proposal implementation leads to approximately a 10% increase in SKY tokens, slowing down issuance and buyback mechanisms to strengthen the supply and demand structure

On March 5, news reports indicated that the native token SKY of the DeFi protocol Sky (formerly Maker) experienced a significant increase following the implementation of the latest governance proposal, with the price rising by approximately 10%. The proposal was approved on February 27 and officially took effect on March 2. The adjustments involved staking reward issuance, the stablecoin lending system, and the token buyback mechanism, which are seen by the market as important steps to optimize the token economic model.

According to the governance plan, Sky has set the future 180-day SKY token issuance at approximately 83.818 million tokens, reducing the previous plan by about 161.82 million tokens. The decrease in issuance means the release rate of staking rewards is slowed, thereby reducing the potential dilution pressure on governance tokens. For investors concerned with DeFi token inflation models, this change is generally viewed as beneficial for long-term value stability.

Meanwhile, the Sky protocol continues to execute an automatic buyback plan supported by USDS stablecoin funds. Data shows that the system has already invested about $114.5 million to buy back approximately 1.83 billion SKY tokens. The buyback operations are carried out through small transactions, averaging around $10,000 per trade, creating a relatively stable buying pressure in the market. Currently, this mechanism reduces about 3.6 million SKY tokens from market circulation daily.

With the slowdown in issuance and the simultaneous buyback efforts, the effective circulating supply of SKY tokens is gradually tightening. Protocol data indicates that approximately 67% of SKY is staked, with the remaining portion traded in the market. This structure means the proportion of tokens actually available for circulation is relatively limited, further amplifying the impact of supply and demand changes on the price.

The governance update also introduces new credit infrastructure to expand lending markets related to the USDS stablecoin. Two new “launch agents” have been integrated into the system, responsible for deploying credit liquidity and managing the funding network connected to the USDS ecosystem, thereby promoting the use of stablecoins in DeFi scenarios.

From an industry perspective, more and more crypto protocols are adjusting their token economic models, reducing high-inflation incentive mechanisms, and stabilizing market structures through buybacks or by lowering issuance. For example, derivatives protocol dYdX has proposed allocating 75% of its protocol revenue to token buybacks; Solana-based Jupiter plans to cease net new issuance of JUP tokens by 2026. Such strategies are gradually becoming important directions for DeFi projects to optimize token value.