The Sky ecosystem recently confirmed its decision to alter the savings rate for its USDS stablecoin, a move that comes as stablecoins increasingly vie for predictable yield. The decentralised finance (DeFi) hub will adjust several parameters in an effort to boost adoption of the Sky ecosystem and reward those who have swapped their MKR and DAI tokens.
Formerly known as Maker DAO, the DeFi lending ecosystem Sky voted to decrease the savings rate on USDS to 8.75%. This decision was made public on February 7, 2025, with execution scheduled for February 10 at 14:00 UTC.
Prior to this change, the Sky ecosystem offered a savings rate of 12.5% for staking USDS. This attractive rate led to an influx of $3 billion in assets under management. The Sky Dollar, set to replace DAI, already boasts 3.75 billion tokens in circulation. Both tokens are currently equal in weight, with DAI still used within the DeFi ecosystem. It remains at the discretion of users when to transition from DAI to USDS, depending on their DeFi and savings strategies or other passive income opportunities.
The proposed changes in the Sky ecosystem were in response to market turbulence experienced on February 3. The USDS savings rate was previously increased gradually through community votes, rising during the final three months of 2024 due to the rapid expansion of underlying assets like ETH and BTC.
However, when Ethereum (ETH) fell to as low as $2,080, the DeFi sector witnessed $313 million in liquidations, mainly impacting Aave (AAVE) and Compound. Despite ETH still showing weakness at $2,595.21, and Bitcoin (BTC) sliding to around $95,000, Sky and Spark Protocol endured with much smaller liquidations, only affecting several smaller vaults.
To mitigate risk in most vaults, Sky proposed changes to the stability fee, suggesting a reduction for most of its vaults. The DAI savings rate will decrease from 11.25% to 7.25%, while USDS has already approved its correction from 12.5% to 8.75%.
The proposal received approval from nine supporters, who voted with 63,827 MKR, which has now become a governance token. MKR has since returned to $909.02, its lowest level since 2021, serving as a voting and governance token, with no role in minting DAI.
Over the past month, USDS has rapidly expanded its supply, outpaced only by USDT and USDC. USDS added 2.1 billion tokens to its supply, while DAI remained steady. The largest increase came from additional mints on the Base ecosystem. USDS has added over $100 million in circulation to the Base ecosystem, with comparatively small experimental vaults.
Despite Sky ecosystem’s aggressive expansion, the underlying SKY token is trading near all-time lows. Currently, SKY is at $0.037, with limited opportunities for derivative trading. The asset still relies on Uniswap V3 for price discovery, with over 62% of volumes depending on DEX liquidity.
As it stands, Spark, the subDAO of Maker, holds $2.75 billion in lending vaults. The project ranks 15th based on total value locked. Despite transitioning away from its leading DeFi app status, Sky continues to uphold the legacy status of Maker.
