MakerDAO Rebrands to Sky Network

Bittime - MakerDAO officially rebrands to Sky Network. They changed names in the middle strategic move to accelerate the adoption of decentralized finance (DeFi).

What are the details of MakerDAO's rebranding to Sky Network? Check out the review in this article.

DAI and MKR Participate in Rebranding to become USDS and SKY

Along with the new name, the protocol has introduced a new name for its governance token and an upgraded version of its stablecoin, DAI.

The decentralized stablecoin DAI will be renamed USDS, while MKR, the governance token, will be replaced by SKY.

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Starting September 18, MakerDAO users will have the option to voluntarily upgrade their assets, exchanging each MKR token for 24,000 SKY coins.

In addition to the rebranding, users holding the new USDS stablecoin will benefit from new features, including a native token incentive that allows them to earn SKY as a reward.

However, the native MKR and DAI tokens will remain as legacy coins in the newly upgraded Sky network.

Other Changes in MakerDAO

The revolutionary move to rename Maker was one of the planned modifications in Endgame's plans. Further changes include changing Maker's DAI Savings Rate (DSR) to Sky Savings Rate. 

DSR allows individuals to borrow DAI stablecoins at flexible interest rates.

Maker DAO recently reduced DSR to 6% from 7% following executive vote approval. Meanwhile, SSR will be similar to DSR, with a slight increase in gas efficiency.

Maker SubDAOs, which Maker relies on to enable innovation outside of the Maker DAO, will become Sky Stars.

Spark, a DeFi lending platform that currently offers DAI depositors a yield of 6% and an interest rate of 7% for USDS borrowers, will be the first SubDAO to launch.

Updated functionality such as Sky Saving Rate and SKY token rewards will be available in select jurisdictions.

However, most of Maker's existing characteristics will remain unaffected, with the new USDS being supported by the exact same mechanisms as DAI.

Purpose Rebranding MakerDAO to Sky Network

The main goal of Maker's rebranding is to make the protocol's governance mechanisms unquestionable to ensure sustainable and decentralized growth.

DAI is the 3rd largest stablecoin with a market capitalization of $5.36 billion. Meanwhile, MKR's market capitalization of $1.94 billion ranks it the 53rd largest in terms of crypto value.

DeFi borrower MakerDAO just announced its long-awaited rebranding to Sky, the latest step in a plan called “Endgame” by co-founder Rune Christensen.

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Pros and Cons of Rebranding MakerDAO into Sky Network

However, reception to this rebranding has been mixed. The most controversial change is that of USDS, a new version of the DAI stablecoin. 

The coin contains a freeze function in its code, giving Sky the authority to stop USDS transfers from the holder's wallet.

While this move should make USDS a less attractive asset for bad actors, including hackers, security experts have questions.

"The effectiveness of this move will depend on how proactive and under what conditions the Sky team chooses to implement it," said Michael Lewellen, Head of Solutions Architecture at crypto security firm OpenZeppelin, as reported by DL News.

Lewellen noted how USDC, another stablecoin with similar controls, has been slow to freeze stolen funds in some cases due to the need for formal legal requests.

"[This] is certainly a step towards making it less attractive to criminals," Lewellen said.

Crypto hackers have historically favored DAI over other stablecoins due to its lack of freeze functionality – no authority has the power to freeze or confiscate the token.

Centralized stablecoins, such as USDT Tether and USDC Circle, have freezing functions, allowing them to confiscate funds from criminals and comply with anti-money laundering regulations.

For Sky, which has backed DAI with $2 billion worth of real-world assets - including US government bonds - complying with such regulations is something it cannot ignore.

With a circulating supply of around $5.3 billion, DAI is the third largest stablecoin. Christensen has said that Sky's goal is to increase DAI supply to "$100 billion and beyond".

Impact of Rebranding

Some people don't like this change because they say it goes against crypto's promise of creating a decentralized, trustless financial system.

By giving an entity the power to freeze tokens, it requires the user to trust that the entity will not abuse its power.

But at the same time, the absence of this freezing function is an advantage for hackers.

They have routinely exchanged stolen assets with freezing functions – such as USDT and USDC – into DAI, or other non-freezable assets such as Ether, at the first opportunity.

For example, hackers who stole $450 million from FTX shortly after the already bankrupt exchange declared bankruptcy in 2022 exchanged some of the stolen funds into DAI.

Grzegorz Trawínski, an auditor at blockchain security firm Hacken, is optimistic.

"This is a step that could prove important in ensuring the longevity and security of the ecosystem," Trawínski told DL News.

Trawínski said the move also reflects broader industry recognition that centralized mechanisms could be needed to protect platforms and users.

Sky does not plan to completely eliminate the non-freezing version of its stablecoin, however.

In a post in May on Sky's governance forum, co-founder Christensen laid out a plan to switch to PureDai - an immutable, unfreezable version of the stablecoin that would have no permanent connection to Sky.

“Native DAI is here to stay,” Lewellen said, adding that DAI could still be a popular choice for those who prefer a decentralized option without restrictions – including criminals.

But there is a caveat. If Sky's new USDS stablecoin is successful, users will migrate to USDS from DAI and DAI liquidity will drop.

And with less DAI in circulation, it will be increasingly difficult for bad actors to use it.

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