The Sky ecosystem voted on altering the savings rate for USDS, as stablecoins increase their competition for predictable yield. The DeFi hub will change several parameters to boost Sky ecosystem adoption and reward all who swapped their MKR and DAI tokens.
The DeFi lending ecosystem Sky, formerly Maker DAO, voted on decreasing the USDS savings rate to 8.75%.
Sky Governance has approved a decrease in the Sky Savings Rate to 8.75%, scheduled for execution on February 10 at 14:00 UTC. pic.twitter.com/IsT7CoT4xV
— Sky (@SkyEcosystem) February 7, 2025
Previously, the Sky ecosystem offered 12.5% in savings for staking USDS, managing to attract $3B in assets under management. Sky Dollar is replacing DAI, already carrying 3.75B tokens in circulation.
Both tokens are currently equal in their weight, though DAI is still used in the DeFi ecosystem. There is no set deadline to move from DAI to USDS, and it is up to users and their choice of DeFi and savings or other passive income opportunities.
Sky ecosystem adapts to market conditions
Some of the proposed changes for the Sky ecosystem reflected the market turbulence on February 3. Previously, the USDS savings rate was increased gradually through community votes, rising during the last three months of 2024 based on the rapid expansion of underlying assets like ETH and BTC.
During the slide of Ethereum (ETH) as low as $2,080, the DeFi sector saw $313M in liquidations, mostly affecting Aave (AAVE) and Compound. ETH is still showing weakness at $2,595.21, as Bitcoin (BTC) slid to the $95,000 range, again putting DeFi vaults and lending at risk.
Sky and Spark Protocol survived with much smaller liquidations, affecting several smaller vaults. The biggest liquidations were for $2.58M in wstETH, and $847.29K for WETH collaterals, with most of the borrowed assets in DAI and WBTC. Vaults using ETH as collateral also lost over $7.5M in liquidations.
To de-risk most vaults, Sky has proposed changes for the stability fee, lowering it for most of its vaults. The DAI savings rate will decrease from 11.25% to 7.25%, while USDS already approved its correction from 12.5% to 8.75%.
The proposal was approved by 9 supporters, voting with 63,827 MKR, as the asset has turned into a governance token. MKR has now returned to $909.02, its lowest level since 2021, serving as a vote and governance token, with no role in minting DAI.
USDS expands its supply in the past month
USDS is the fastest-growing stablecoin with yield offerings, surpassed only by USDT and USDC. In the past month, USDS added 2.1B tokens to its supply, while DAI remained unchanged.
USDS expanded its supply as a test on Solana, but the biggest increase comes from additional mints on the Base ecosystem. For now, USDS has added more than $100M in circulation to the Base ecosystem, with relatively small experimental vaults. The mint was similar to the Solana experimental vault.
USDS is part of the VaultsFYI app on Base, an app to preview and access lending vaults. DeFi remains risky, mostly due to the fluctuating value of collaterals.
Base now carries $3.77M in stablecoins, with an inflow of USDC, in addition to smaller algorithmic and asset-backed stablecoins.
Despite the aggressive expansion of the Sky ecosystem, the underlying SKY token is trading near its all-time lows. SKY is at $0.037, with few opportunities for derivative trading. The asset still relies on Uniswap V3 for its price discovery, with over 62% of the volumes relying on DEX liquidity. Unlike MKR, SKY is slow in establishing its value. Additionally, SKY is also used for governance, and is not tied to the value of the protocol.
Currently, Spark, the subDAO of Maker, carries $2.75B in lending vaults. The project is ranked 15th based on total value locked. Sky retains the legacy status of Maker, though it has moved away from being a leading DeFi app.
