Originally published on: November 04, 2024
In an exciting development, Sky co-founder Rune Christensen has proposed an innovative tokenomics model to stop emissions and reduce total token supply. This proposal aims to bring about a “burn-only” deflationary model that will systematically decrease the core token supply through a controlled burn mechanism.
Under this new structure, token emissions would not occur under normal circumstances, ensuring a steady reduction in token supply. The only exception to this rule would be in emergency situations where the stability of stablecoins like USDS or Dai could be at risk due to collateral shortfalls.
Christensen clarified that in cases of insolvency risk, new tokens would be issued to cover the deficit, maintaining the stability of the stablecoins. This emergency issuance aligns with the original tokenomics model of the protocol.
Alongside the deflationary model, Christensen’s proposal includes a reward system to encourage participation and enhance token value. Holders of the core token, whether it remains as MKR or transitions to SKY, would be able to earn Star Token Rewards like Spark through Activation.
Moreover, committed governance participants utilizing the Seal Engine would receive premium rewards in both Star Tokens and USDS Rewards. This reward structure is set to incentivize active involvement within the ecosystem.
The proposal is set to be voted on by stakeholders between Nov. 11 and 14, where they will decide whether MKR or SKY will be the core token moving forward. This vote follows a period of uncertainty regarding the rebrand to Sky from Maker, with many members of the community considering reverting to the original name due to confusion.
Christensen’s proposal provides a clear path forward for the ecosystem, allowing it to focus on growth and development. The deflationary model and reward system are designed to foster sustainability and stability within the protocol, ensuring a bright future for Sky and its community.
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