The holders of MKR tokens are rushing to swap to the new asset of Sky Protocol. From September 22, holders of the old token will start to incur penalties.
Holders of the legacy MKR tokens are rushing to swap them for the new Sky Protocol asset. From September 22, a 1% penalty will apply to MKR swaps, rising every month by one percentage point. The proposal has settled all details and is now down to the community vote to enforce the decision.
The vote to implement the Delayed Upgrade Penalty for upgrading MKR to SKY is live.
As part of the ongoing MKR to SKY Upgrade process, the Sky Atlas specifies that the September 18, 2025 Executive Vote will set the Delayed Upgrade Penalty for the new MKR to SKY conversion… pic.twitter.com/1fMTQ3Gy6a
— Sky (@SkyEcosystem) September 18, 2025
The protocol has announced the delayed penalty on its MKR upgrade hub. For now, even with the penalty, the token will remain functional.
Sky Protocol still has no strict deadline on swapping MKR
Sky Protocol did not have a hard deadline on swapping MKR tokens, and the legacy asset continues to transact and trade for years after the rebranding. Around 82% of MKR has been converted to SKY, but around 176,088 MKR tokens remain. MKR still trades at $1,808.37, with $3.34M in daily volumes.
Previously, MKR was key in the creation of DAI tokens, but was replaced by other collaterals and minting mechanisms. Around $318M is locked in the old version of the token.
SKY traded at $0.0775, near the middle of its range for the past year. Sky Protocol is among the apps to benefit from a return to DeFi, though the project lost its leading position as the biggest stablecoin producer.
Sky Protocol still managed to survive a prolonged bear market and remain relatively unscathed from the bankruptcies of other protocols.
Recently, swaps of MKR accelerated, as the new platform expanded its activity. However, some traders have also swapped back into MKR in April, to make use of the token’s remnant price action.
Swaps from MKR to SKY accelerated, as some protocols upgraded their holdings. MKR owners still hold over 170K MKR, potentially incurring over $3M in late swap penalties. | Source: Dune Analytics
A part of the swap delays may be due to the MKR/SKY discount or premium, based on the difference of the implied or actual price of SKY.
Sky Protocol will gain from MKR penalties
Ahead of the penalty deadline, Binance already discontinued the MKR ticker after its delisting on September 15. Binance will automatically swap out all MKR into SKY before relisting the only remaining ticker.
A rough estimate suggests around 170K MKR will not be swapped out on time. Some of the MKR sitting in centralized protocols was also swapped out automatically. Any remaining MKR may pay at least 3M in late fees to Sky Protocol.
The recent swaps ended the Maker era, encouraging the usage of SKY for staking and other rewards. The Sky ecosystem is now more conservative, with a 4.75% savings rate, down from a peak of over 12%.
The protocol also fully rebranded DAI to USDS, retaining the supply of 5.6B tokens. Currently, the Sky ecosystem carries over $17B in total value locked, aiming for more sustainable yield. Sky Protocol carries multiple collaterals from other DeFi projects, aiming for a minimal percentage of capital at risk.
