In my previous MKR/SKY report several months ago, I predicted that restarting the buyback mechanism would position MKR to outperform most crypto assets on a risk-adjusted basis. Since the buyback announcement on February 20:
- MKR surged 46% against BTC
- MKR rose 70% against ETH
- MKR became one of few cryptocurrencies with year-to-date (YTD) gains at +24%
Here’s why this trend will likely continue:
1. SKY Staking Mechanism Launch
MKR/SKY currently allocates 100% of protocol revenue to buybacks. At the current pace:
- **$15M monthly buybacks** (~$500K daily)
- Equivalent to 1% of circulating supply—the highest proportion among crypto projects
On April 30, Rune proposed a staking mechanism:
- 50% of revenue (USDS) to SKY stakers → ~$250K daily
- 50% to buybacks → ~$250K daily
- Expected 7-8% APY for stakers (assuming 33% supply staked).
👉 Discover how staking boosts MKR's value
2. Mandatory SKY Token Migration (Supply Shock)
The migration from MKR to SKY will likely burn 10–20% of MKR’s supply:
- Lost tokens: Chain analysis shows ~90% of inactive MKR (2017–2024) are permanently lost.
- Precedent: Aragon DAO’s migration left 27% of ANT unclaimed.
- Impact: Reduced supply supports price appreciation.
This migration may also drive CEX listings for SKY.
3. SPK Token Mining Program
Spark, a lending/asset-management protocol, will launch SPK:
- Fair launch: Users mine SPK by staking USDS or SKY.
- 50% incentives ($250M value) for stakers over 2 years.
- Expected $500M FDV, boosting demand for SKY/USDS.
Additional subDAOs (e.g., Solana Star, RWA Star) will further fuel buybacks.
4. Stablecoin Bill’s Catalytic Effect
The GENIUS Act (likely signed by Trump in July/August):
- Targets centralized issuers but validates decentralized stablecoins.
- Could accelerate adoption of SKY-backed USDS.
Key Takeaways
- Revenue split: Buybacks + staking sustain demand.
- Supply crunch: Migration burns lost tokens.
- Ecosystem growth: SPK mining and subDAOs amplify utility.
👉 Learn more about MKR’s buyback strategy
FAQ
Q: How does SKY staking work?
A: Stake SKY to earn USDS (50% of protocol revenue). Expected APY: 7–8%.
Q: What happens to unmigrated MKR?
A: Lost tokens (~10–20% of supply) are permanently burned.
Q: Why is SPK important?
A: It incentivizes USDS/SKY staking, driving demand for both assets.
Q: When will the stablecoin bill pass?
A: Likely July/August 2024, per industry experts.