What Is Sky (SKY)? The Governance Token That Replaced MKR

Sky (SKY) is the governance token of the Sky protocol, formerly MakerDAO, the project that issues the USDS and DAI stablecoins. SKY replaced MKR as the protocol's voting token at a rate of 24,000 SKY for each MKR. Holders use it to vote on how the protocol runs, and they can stake it to earn rewards.

The switch from MKR is close to finished. By the early-November close, 91.5% of the MKR that existed before Sky launched had been upgraded to SKY. The 82,752 MKR still left could be upgraded at 22,800 SKY each, 5% below the original rate, because a late-upgrade penalty had risen in five quarterly steps.

Did MakerDAO Become Sky?

Yes. The protocol MakerDAO built runs under the Sky name, and its governance token changed from MKR to SKY. Sky's developer guide to the token upgrade describes the change as part of "Sky's evolution from its MakerDAO roots" and spells out what moved. SKY replaced MKR "for all on-chain votes and protocol parameters on the new Chief governance contract", the contract that runs the protocol's voting.

The SKY token's smart contract went live on Ethereum in September 2024. For about eight months it ran beside MKR, and a two-way converter let holders swap in either direction at 24,000 SKY per MKR.

That changed in May 2025, when a governance vote made SKY the protocol's only voting token and the conversion became one way. The old two-way converter lost its power to mint SKY in June 2025. MKR still exists as a token on Ethereum, but it no longer carries a vote, and the only route the protocol offers out of it leads to SKY.

DAI holders didn't have to do anything. DAI stayed in place, and the protocol added USDS beside it with a converter that swaps the two one for one.

Is Sky a Stablecoin?

No. SKY is a governance token, and its price floats like any other crypto asset's. On Phemex's SKY/USDT spot market it closed the early-November day near $0.062, about 0.7% lower, while the median of Phemex's 68 USDT- and USDC-margined crypto perpetuals rose about 2.3%.

The stablecoins are USDS and DAI, two dollar tokens that the protocol issues and SKY holders govern.

DAI starts life as debt. In the classic case, a borrower locks crypto in one of the protocol's vaults and draws DAI against it. If that collateral loses too much value, the protocol takes it and sells it at auction. It's a form of crypto lending where the protocol creates the dollars it lends.

USDS is the newer of the two. Sky's USDS documentation says the DAI and USDS converter charges no fee and that "Fees cannot be enabled on this route in the future". So switching between DAI and USDS costs you only the Ethereum network fee.

The four names are easy to mix up, and they line up like this.

How Far Has the MKR to SKY Upgrade Gone?

Most of the way. When Sky's one-way converter opened in May 2025, governance stocked it with about 20.5 billion SKY, enough to upgrade every MKR still outstanding at 24,000 each.

Holders moved fast. About 683,000 MKR, close to 70% of the MKR that existed before the upgrade, came through between that opening and the first penalty step in September 2025.

The penalty runs on a timetable. Sky's upgrade timeline set a 1% cut from September 2025 and an extra point "every 3 months after". Each rise goes ahead "unless Sky Governance decides otherwise", and the chain shows five quarterly steps through September 2026. The fifth took the cut to 5%. If that pace held, the cut would reach 100% about 25 years after it began.

The converter's code accepts any penalty up to 100%, so the quarterly pace is a governance choice that a single vote can change. The SKY held back by the penalty stays in the converter until governance collects it, and about 39.9 million SKY sat there at the close.

The pull has faded. Upgrades came to about 34,000 and 42,000 MKR in the two quarters after the penalty began, then fell below 5,100 MKR in each of the next two.

How Does SKY Govern the Protocol?

SKY holders run the protocol by vote. To take part, you lock SKY in the Chief, the contract that tallies support for each proposal. Whatever SKY you lock there becomes your voting weight, and the Chief's approval voting lets you put that full weight behind every proposal you support.

Each executive proposal is a spell, a one-off contract that makes its set of changes a single time. A spell that wins still waits out a set delay before it runs. Those votes set the protocol's parameters, including the MKR penalty's pace and who may mint SKY.

You can take SKY back out of the Chief, and it stops counting once you do. That's a looser setup than vote-escrowed token models, which lock tokens for a fixed term in exchange for extra voting power.

Staking runs through a separate contract, the Staking Engine. Sky's Staking Engine documentation says one deposit there can earn rewards, back a USDS loan and hand its voting power to a delegate. The docs add that you can't move a position to another address.

At the close, the Staking Engine held about 10.3 billion SKY, roughly 44% of the 23.45 billion then in existence.

That total can grow. SKY's token contract lets approved addresses mint new tokens, and the protocol's governance contract held that right at the close, as did a vesting contract that pays SKY out over time. That makes governance votes the place to watch for new supply.

How to Buy Sky Crypto Safely

Phemex lists SKY on its SKY/USDT spot market, which opened in September 2025. Its SKY/USDT perpetual is delisted, and so are Phemex's MKR pairs and its DAI and USDS spot pairs. If you already hold MKR, you don't need to buy SKY at all, because step 5 below turns MKR into SKY directly.

1. Open a Phemex account and fund it with USDT.

2. Buy SKY on the SKY/USDT spot market with a limit order.

3. To hold the keys yourself, withdraw it to a non-custodial wallet on Ethereum.

4. Match the token in your wallet against SKY's Ethereum contract address, 0x56072C95FAA701256059aa122697B133aDEd9279.

5. To upgrade MKR, use Sky's portal at sky.money or the converter at 0xA1Ea1bA18E88C381C724a75F23a130420C403f9a.

Both addresses are the ones Sky's developer docs list, and look-alike tokens carry other addresses. The protocol can't reverse an upgrade once it's done.

SKY's own perpetual is delisted, so the futures links here open Phemex's wider futures market. Futures use leverage, and a leveraged position is closed automatically if losses push its margin below a set minimum, which is called liquidation in crypto trading.

Frequently Asked Questions

Can I still convert MKR to SKY?

Yes, one way. At the early-November close, Sky's converter paid 22,800 SKY per MKR after a 5% late-upgrade penalty that has risen a point each quarter since September 2025. Sky governance can change that pace, and the protocol can't turn SKY back into MKR.

Is MakerDAO on Ethereum?

Yes. SKY and MKR are both Ethereum tokens, and the protocol's votes run through its Chief contract on Ethereum. The one-way upgrade from MKR to SKY happens there too, through Sky's converter.

Is SKY on Phemex?

Yes. You can buy SKY on Phemex's SKY/USDT spot market. Phemex has delisted the SKY/USDT perpetual and every MKR pair it listed.

Bottom Line

SKY is MakerDAO's vote in a new name and a much smaller unit. At the close, about 8.5% of the MKR that existed before the upgrade had yet to switch, and that remainder had shrunk slowly since March 2026.

That changes what the penalty is. Each new step does less to move MKR and more to cut what the remaining MKR can claim, another 240 SKY per MKR each time.

Whatever the penalty withholds sits in a pot that governance controls. The vote to watch is the one that sets the penalty's pace.

Disclaimer: This article is for informational purposes only and is not financial advice. Cryptocurrency trading involves substantial risk. Always do your own research before making investment decisions.