SKY, the native token of Sky, formerly Maker, rose nearly 10% after the protocol put a governance proposal into effect. The move focused on supply: new token creation from staking rewards was slowed, while a large buyback program continued to pull tokens out of the market.
The proposal passed on Feb. 27 and was executed on March 2. It introduced several changes across the Sky Protocol, including updates to staking rewards and new credit infrastructure aimed at extending the reach of the USDS stablecoin ecosystem.
Staking emissions reset at about 838.18 million over 180 days
One of the key items was a reset of SKY staking emissions. Under the new schedule, distribution is set at roughly 838.18 million SKY over the next 180 days, about 161.82 million tokens less than the previous plan. Lower emissions matter for governance tokens because they can ease dilution pressure in the market.
Sky has also been supporting demand through an automated token buyback program funded with USDS. Data from the protocol dashboard shows about $114.5 million has been spent so far to repurchase roughly 1.83 billion SKY. The buying is spread through the day in smaller orders, with trades typically around $10,000 each rather than a single large purchase.
Buybacks and staking leave less SKY available to trade
According to protocol data, the system is currently removing around 3.6 million SKY per day from circulation. That pace, combined with lower emissions, has tightened effective supply. Sky also indicates that roughly 67% of the token supply is staked, leaving a smaller share actively available in the market.
The proposal also approved new infrastructure to broaden credit markets connected to the protocol. Two new Launch Agents were added to help deploy credit and manage liquidity infrastructure linked to the USDS system.
More protocols are moving away from inflation-heavy incentives
The changes at Sky fit a wider shift across crypto, where more protocols are adopting token models centered on buybacks and lower emissions instead of the inflation-heavy incentives common in early DeFi. Those earlier models helped attract liquidity providers, traders, and governance participants, but they also created lasting sell pressure as newly distributed rewards were often sold into the market.