Sky

Sky brings MakerDAO's battle-tested stablecoin and savings model to Solana, offering users the ability to earn stable yields while maintaining full control of their assets. The protocol issues USDS, a fully collateralized USD-pegged stablecoin, and offers a native savings rate mechanism providing consistent returns for USDS holders. Since migrating to Solana in late 2023, Sky has accumulated over $100M in total value locked (TVL) and established itself as a cornerstone of Solana DeFi infrastructure. The protocol combines traditional DeFi primitives with innovative features like the Peg Stability Module (PSM) and a sophisticated governance system powered by the SKY token.

From MakerDAO to Sky: A New Chapter in DeFi

Sky represents the evolution of MakerDAO's vision for decentralized finance, reimagined for the Solana ecosystem. The migration from Ethereum to Solana marked a strategic shift focused on leveraging Solana's high performance and low transaction costs to create a more accessible and efficient platform for decentralized financial services.

This transition involved more than just a technical migration - it represented a fundamental reimagining of how decentralized stablecoins and savings protocols could operate in a high-performance environment. The rebrand from DAI to USDS and MakerDAO to Sky signaled this new direction, with the protocol maintaining its core principles of decentralization and security while embracing Solana's capabilities for enhanced user experience and functionality.

How Sky Works

At its foundation, Sky operates through three core components that work together to create a robust decentralized financial system: the USDS stablecoin, the Sky Savings Rate (SSR), and the governance mechanism powered by SKY tokens.

USDS: The Foundation of Sky's Ecosystem

USDS represents a new generation of decentralized stablecoin, building on the lessons learned from DAI while leveraging Solana's advantages. Users can mint USDS through the Peg Stability Module (PSM) by depositing USDC at a 1:1 ratio, ensuring full collateralization and stable peg maintenance.

The PSM serves as the primary mechanism for USDS issuance and redemption, providing instant liquidity and maintaining the dollar peg through direct convertibility with other major stablecoins. This approach eliminates the complexity of over-collateralization while maintaining the benefits of decentralization and transparency.

Sky Savings Rate (SSR)

The Sky Savings Rate represents one of the protocol's most innovative features, offering users a consistent yield on their USDS holdings without requiring them to lock up their assets or take on additional risk. When users deposit USDS into the SSR, they receive sUSDS tokens that automatically accumulate value based on the current savings rate.

This yield is generated from protocol revenues, including fees from the PSM and other Sky services, creating a sustainable source of returns for users. The SSR rate is determined through governance voting, allowing the community to adjust returns based on market conditions and protocol sustainability.

Strategies and Opportunities

Sky offers several strategies for users to participate in the protocol and earn yields, each catering to different risk preferences and investment goals.

Earning Through the Sky Savings Rate

The most straightforward strategy involves depositing USDS into the Sky Savings Rate. Users receive sUSDS tokens representing their deposit, which automatically accumulate value at the current SSR. This approach requires no active management and provides predictable returns without exposure to market volatility.

Current SSR rates typically range between 4-8% APY, offering competitive yields compared to traditional finance while maintaining high liquidity and minimal risk. Users can withdraw their funds at any time, with no lockup periods or penalties.

Governance Participation

Active participation in Sky governance through the SKY token offers additional earning opportunities. Governance participants can earn rewards for voting on proposals, participating in discussions, and contributing to protocol development. The protocol allocates a portion of its revenue to governance rewards, incentivizing long-term engagement with the ecosystem.

What Makes Sky Special

Sky distinguishes itself through several unique features and approaches to decentralized finance:

Solana-Native Architecture

Unlike many protocols that simply port Ethereum solutions to Solana, Sky has been redesigned from the ground up to leverage Solana's advantages. This includes near-instant transaction settlement, minimal fees, and the ability to process thousands of transactions per second.

Sustainable Yield Generation

The Sky Savings Rate generates yields through actual protocol revenue rather than relying on token emissions or unsustainable farming rewards. This approach ensures long-term sustainability while providing competitive returns to users.

Simplified User Experience

Sky prioritizes user experience, offering a streamlined interface that makes complex DeFi operations accessible to mainstream users. The protocol eliminates common friction points like gas fees and long confirmation times through its Solana implementation.

Sky Features

Peg Stability Module (PSM)

The PSM serves as the primary mechanism for maintaining USDS's dollar peg, allowing users to swap between USDS and other major stablecoins at a fixed 1:1 ratio. This direct convertibility ensures stable price maintenance while generating fee revenue for the protocol.

Governance Dashboard

Sky's governance interface provides comprehensive tools for protocol participation, including proposal creation, voting, and delegation. The dashboard displays real-time protocol metrics and allows users to track their governance rewards and voting power.

Analytics Platform

The protocol includes robust analytics tools that provide transparency into key metrics like TVL, yield rates, and governance participation. These tools help users make informed decisions about their participation in the ecosystem.

Sky Team

Sky maintains a decentralized structure without a traditional corporate hierarchy. The protocol is governed by SKY token holders and managed through the Sky DAO, with development and maintenance handled by a distributed team of contributors.

Key contributors include experienced developers from the MakerDAO ecosystem and Solana native builders, though the protocol emphasizes anonymous contribution to maintain true decentralization. Technical decisions are made through governance proposals, ensuring community involvement in protocol development.

Sky Roadmap

Sky's development roadmap focuses on expanding protocol utility and increasing decentralization. Key upcoming features include:

Phase 1: Infrastructure Enhancement

• Integration with major Solana DeFi protocols
• Expansion of PSM collateral types
• Implementation of advanced risk management tools

Phase 2: Feature Expansion

• Introduction of leveraged positions
• Development of institutional tools
• Launch of cross-chain bridges

Phase 3: Protocol Maturity

• Complete transition to DAO governance
• Implementation of automated risk management
• Integration with real-world assets

SKY Token and Tokenomics

The SKY token serves as the governance token for the Sky protocol, with a total supply of 1 billion tokens. The distribution includes:

• 40% allocated to the community treasury
• 30% distributed to early users and contributors
• 20% reserved for protocol development
• 10% allocated to the foundation reserve

SKY holders can participate in governance decisions, earn protocol rewards, and benefit from protocol growth through value accrual mechanisms.

Security and Audits

Sky prioritizes security through multiple layers of protection:

Smart Contract Security

The protocol's smart contracts have undergone extensive auditing by leading firms including OtterSec and Kudelski Security. All audit reports are publicly available through the protocol documentation.

Risk Management

Sky implements sophisticated risk management systems, including automated monitoring tools and emergency shutdown mechanisms. The protocol maintains significant safety margins in its operations to protect user funds.

Insurance Coverage

The protocol has secured coverage through multiple insurance providers, offering protection against smart contract vulnerabilities and other technical risks.

Getting Started with Sky

Using Sky requires a Solana wallet and SOL for transaction fees. New users can:

1. Connect their wallet to the Sky interface
2. Deposit USDC or other supported stablecoins to mint USDS
3. Choose between depositing USDS in the Sky Savings Rate or participating in governance with SKY tokens

The protocol provides comprehensive documentation and user guides to help newcomers navigate its features effectively.