SKY, the initial token from DeFi platform Sky (formerly Maker), surged nearly 10% after the protocol executed a governance proposal that slowed the rate at which new tokens are created through stake rewards, expanded its lending system around the USDS stablecoin, and continued a large buyback program that pulls tokens from the market.
The governance proposal, which was adopted on February 27 and was executed on March 2, introduced several changes across the Sky protocol, including adjustments to stake rewards and the onboarding of new credit infrastructure designed to expand the reach of its USDS stablecoin ecosystem.
One of the most watched changes involved staking rewards – the rate at which new coins are issued as a return for locking existing holdings into the protocol.
Slower supply growth
The proposal “normalized” the so-called SKY staking emissions by setting the distribution to about 838.18 million tokens over the next 180 days, representing a reduction of about 161.82 million tokens compared to the previous schedule. Lower emissions can reduce dilution pressure, a factor traders often pay close attention to when evaluating governance tokens.
At the same time, the protocol has been steadily buying back its own token through an automated buyback program funded with USDS. According to Sky’s dashboard, the system has spent about $114.5 million to buy back about 1.83 billion SKY tokens so far.
The purchases are made in small transactions throughout the day, typically around $10,000 per transaction. trade, which creates a stable offer on the market. In total, the program currently removes around 3.6 million SKY tokens from circulation each day.
Combined with the emission adjustment, the buybacks have tightened the token’s effective supply. Data from the protocol indicates that around 67% of SKY is currently staked, leaving a smaller portion actively trading in the market.
The governing proposal also approved new infrastructure to expand credit markets around the protocol. Two new “launch agents” were deployed to help implement credit and manage liquidity infrastructure associated with the USDS stablecoin system.
Industry trend
Across the crypto market, a growing number of protocols are shifting towards token models built around buybacks and lower emissions, replacing the inflation-heavy incentive systems that dominated early DeFi.
In the past, many protocols distributed large amounts of newly minted tokens to attract liquidity providers, traders, and government participants. While these incentives helped bootstrap networks, they also created sustained selling pressure as recipients often sold rewards to the market.
Recently, protocols have begun to move in the opposite direction. Instead of issuing more tokens, some protocols use revenue to repurchase tokens on the open market or reduce emissions altogether.
Hyperliquid offers a recent example. The decentralized exchange allocates a portion of trading fees to buy and burn its HYPE token. As trading activity picked up last week, the protocol generated more than $13 million in weekly fees, allowing roughly $9 million worth of tokens to be burned over the course of seven days.
Other projects are pursuing similar approaches. Solana-based Jupiter voted in February to eliminate net new issuance for its JUP token in 2026, preventing additional supply from entering circulation. Meanwhile, derivative protocol dYdX approved a plan allocating 75% of protocol revenue to token buybacks.
The shift reflects a broader effort to tie token demand more directly to protocol activity while limiting dilution for existing holders.
