MakerDAO’s Future Hangs in Balance with Upcoming Vote on Deflationary Tokenomics and Sky Rebrand

• MakerDAO vote could introduce strictly deflationary governance, affecting token supply and stability.
• Community vote to decide if MakerDAO shifts from MKR to SKY, with potential impact on token emissions.
• Christensen’s proposal includes a dual-star model with Sky and Spark, boosting MakerDAO’s user incentives.

Sky, formerly MakerDAO, is set for a major governance vote on November 11 that could define the future of its tokenomics and branding. Rune Christensen, Sky’s founder, has outlined a strictly deflationary approach to its governance token.

He offered two pathways which are a complete rebrand to SKY or a pivot back to the original Maker name. Each option carries distinct implications for token structure, utility, and governance incentives.

To follow the governance vote on whether to keep Sky or recenter the Maker brand, I'm preparing a proposal that clarifies tokenomics and other key questions.

Deflationary Tokenomics
This proposal would change the core token (Regardless of whether the outcome is MKR or SKY) to…

— Rune (@RuneKek) October 30, 2024

Proposed Deflationary Tokenomics

Under Christensen’s proposal, the governance token would adopt a strictly deflationary model. This plan would eliminate token emissions under regular circumstances. This will allow the total supply to decrease over time through a permanent token burn mechanism. This strategy is designed to reduce supply steadily, increasing scarcity and, potentially, value.

An exception to this deflationary model would only occur if MakerDAO faces a significant financial shortfall. This could threaten the stability of its stablecoins, Sky Dollar (USDS) and DAI. In such cases, emission controls could temporarily adjust to ensure liquidity and stability within the ecosystem.

Governance and Incentive Mechanism

Beyond tokenomics, the proposal includes introducing Star Token Rewards, with new incentives for governance participants. Spark (SPK), the proposed new governance reward, would become available to users engaging in governance activities. This would increase incentives for active participation and integrate Maker’s Seal Engine for added engagement.

If approved, the proposal would see the current SKY token rewards phased out and replaced with SPK rewards. SKY tokens removed from circulation via the Smart Burn Engine would ensure no net emission increase, aligning with the protocol’s deflationary objectives.

Potential Scenarios for Sky and Maker

The upcoming vote also brings a choice between retaining the Maker brand or fully adopting Sky’s identity. Should Sky win, Maker tokens would rebrand as Wrapped 24k Sky Tokens (SKY24K), enabling holders to transition seamlessly without adjusting their existing positions. This new brand identity aims to simplify governance participation and integrate users with the Seal Engine and other governance features.

Dual-Star System

Christensen’s vision for a dual-star system features both Spark and Sky as Stars, each with distinct responsibilities. Spark would concentrate on supply growth through collateral allocation, while Sky would drive demand by promoting USDS utilization. 

Sky.money, a platform focused on accessibility rewards, would support Sky’s adoption efforts. Initially, Sky will exclusively control accessibility rewards, while Spark manages Maker’s allocation system.

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