MakerDAO founder proposes strict deflationary tokenomics amid rebranding process MakerDAO founder proposes strict deflationary tokenomics amid rebranding process
If approved, the proposed tokenomics would eliminate token emissions under regular conditions, transforming the token structure to be strictly deflationary.
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Updated: Nov. 1, 2024 at 1:47 am UTC
Cover art/illustration via CryptoSlate. Image includes combined content which may include AI-generated content.
Rune Christensen, founder of Sky (formerly MakerDAO), has proposed a strictly deflationary approach to the protocol’s governance token as the community prepares to vote on whether to revert its brand or not on Nov. 11.
Christensen explained that the proposed changes would affect the governance token supply, whether it continues as SKY or pivots back to MKR.
Deflationary tokenomics
If approved, the proposed tokenomics would eliminate token emissions under regular conditions, transforming the token structure to be strictly deflationary.
The burning mechanism, integral to Maker’s tokenomics, would permanently reduce the total token supply over time. An exception to this rule would exist only in cases of significant financial shortfall, potentially jeopardizing Maker’s stablecoins — Sky Dollar (USDS) and DAI.
Under the proposal, the ecosystem would introduce “Star Token Rewards,” including Spark (SPK), which token holders could earn through governance participation and activation of Maker’s Seal Engine, adding new incentives for engagement while adhering to the deflationary model.
Distinct scenarios ahead
The community vote will also decide whether to retain the established Maker brand or fully adopt the Sky identity. If the Sky brand wins, MakerDAO plans to migrate the entire MKR ecosystem into SKY, rebranding MKR tokens as Wrapped 24k Sky Tokens (SKY24K).
This transition aims to prevent confusion about legacy MKR tokens and avoid requiring holders to make any changes to their existing positions. The switch would simplify integration, enabling MKR holders to access Seal Engine features and governance without complications.
In the event that the Maker brand prevails, Sky would shift into an auxiliary role as a “Star,” promoting adoption in a way complementary to Spark, which primarily drives collateral and borrowing activity. Under this structure, Sky’s token would be renamed OLD_SKY, convertible back to MKR at a fixed rate of 1:24000, or, for a limited time, exchanged 1:1 for tokens governing the Sky Star.
Dual-Star system
Christensen’s proposal envisions Spark and Sky as complementary “Stars” within Maker’s ecosystem, targeting both the supply and demand sides.
While Spark would focus on collateral allocation and borrowing incentives, Sky would concentrate on building adoption through USDS utilization. Sky would also control the Sky.money platform and operate with an Accessibility Reward system, providing incentives for projects that increase USDS adoption.
In its initial phases, Sky will have exclusive access to the Accessibility Reward system, while Spark will hold exclusive rights to Maker’s Allocation System. This temporary distinction aims to streamline each Star’s focus as the ecosystem grows.
The final vote on this proposal will take place from Nov. 11 to Nov. 14, with additional details to be released in the coming days. MakerDAO is positioned to strengthen its foundational structures, either with a renewed Maker brand or a streamlined Sky transition, fostering sustainable growth through expanded USDS and a more engaged, incentivized community.
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Gino Matos
Gino Matos is a law school graduate and a seasoned journalist with six years of experience in the crypto industry. His expertise primarily focuses on the Brazilian blockchain ecosystem and developments in decentralized finance (DeFi).
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In this article
Maker is a decentralized autonomous organization on the Ethereum blockchain seeking to minimize the price volatility of its own stable token — the Dai — against the IMF’s international currency basket SDR.
Dai
$0.99997
Dai (DAI) is a cryptocurrency token and operates on the Ethereum platform.
Maker is a Decentralized Autonomous Organization that creates and insures the dai stablecoin on the Ethereum blockchain.
Rune Christensen is Chief Executive Officer and Cofounder of MakerDAO.