Altcoin Spotlight: What is Sky Protocol (SKY)?

The Sky Protocol recently broke the top 60 on CoinMarketCap.com. But what is this cryptocurrency? And how did it rise up the charts so quickly?

The reality is, Sky Protocol is a rebranded token that has already appeared in our altcoin spotlight. Regardless, it’s time we feature it again, especially now that the platform has transformed into something new.

What is Sky Protocol?

The Sky Protocol is a decentralized financial platform allowing for transactions in the USDS stablecoin. It allows individuals to use DeFi financial products with the assistance of a fiat-backed stablecoin. The platform incentivizes users to participate through a series of Sky Token Rewards, allowing users to earn more as they use the platform.

If this sounds familiar, it should, as Sky Protocol is simply the Maker protocol rebranded. You might remember the article we published in 2021, which highlighted the features of this platform, and how you could use it to loan yourself ETH.

If you still hold MKR tokens, it’s time to convert them to SKY tokens. Currently, for every MKR token you hold, you will receive 24,000 SKY.

What is SKY?

SKY is the native utility token behind the Sky Protocol. It is used to execute transactions on the platform. It allows you to use DeFi products while locking up a specific amount in USDS stablecoin in a smart contract, thus combining the DeFi and stablecoin worlds.

Why Did Maker Rebrand?

Maker rebranded in an effort to appeal to a wider audience. Previously, the MakerDAO platform did not interconnect with the USDS stablecoin, meaning individuals wanting to use the dapp had to go all in on altcoins in order to participate. The creators of the platform hoped that the rebrand, with the addition of stablecoins, would simplify the governance process and allow for the inclusion of an increased audience.

We do need to mention, though, that this transformation is also a step away from the DeFi world for the protocol and a step toward the tradFi world. Meaning we believe further changes are likely coming. Especially because MKR already announced a possible reversion to their original branding.

What Can You Do With SKY?

SKY is a utility and governance token, meaning you can use it to perform actions on the Sky Protocol Platform, as well as vote on program upgrades. Additionally, you can stake your SKY in exchange for some USDS rewards, something which is becoming very popular for investors.

In general, SKY has little value outside of the Sky Protocol, meaning it traditionally isn’t considered an investment-grade token, though it can be staked like ETH.

Who Created SKY?

MKR was originally created by Danish man Rune Christensen in 2014. It took three years for the platform to launch as a Dapp on the Ethereum platform, which, of course, was right before the long crypto winter.

Sometime over the years, Rune Christensen left the project. According to the website, the team behind Sky Protocol now includes Gauthier Lamothe and Peter Hubshman as well as a large number of developers.

Should You Invest in SKY?

In our opinion, a rebrand is never a good thing. It typically indicates that there was a problem with the old brand. This “problem” doesn’t always have to be nefarious—rather it can just indicate that there was a lack of interest in the old project, a large enough lack that the company decided to rebrand.

As such, we rarely recommend investing in projects that rebrand. Rather, we recommend waiting and watching, ensuring that the rebrand version of the project is here to stay before making any investment decisions. Often, a rebrand can be a precursor to a company closing down or ending its services, especially if the money spent on the rebrand isn’t recuperated in a timely manner. With talks of reverting to the original branding all over the news, we assume that Maker did not get the return they thought they would on their rebrand.

We also believe that Maker/Sky Protocol, is fighting a losing battle as there are just so many better platforms in the DeFi space. When we wrote this article, SKY was number 54 on CoinMarketCap, with a large number of similar and better-established projects listed at lower numbers. The cryptocurrency world is simply flooded with similar projects and SKY isn’t doing enough to stand out, and we doubt they will ever truly be able to compete with Ethereum, Solana, Polygon, and Cardano.

Because of these reasons, and the fact that one MKR now equals 24,000 SKY, this rebrand raises some serious red flags in our minds. Therefore, we recommend approaching any investment in SKY with extreme caution and do not invest any money you don’t intend to lose.

Where Can You Buy SKY?

If you previously held the MKR token, head on over to the Sky Protocol website and use one of their converter contracts. As of the writing of this article, conversions are free, however, in order to encourage everyone to convert in a prompt manner, there will eventually be a fee to convert—so do so right away.

If you want to outright purchase SKY and don’t own any MKR, you can purchase on these exchanges:

·      Binance

·      Coinbase

·      LCX

·      KuCoin

·      Bitget

·      The Sky Platform

This list is not exhaustive, and it is likely you can also find SKY on decentralized exchanges like UniSwap and SushiSwap.

Remember that it is always most cost-effective to purchase a cryptocurrency on an exchange where you already have an account, whenever possible.

Overall, we don’t think that SKY is a bad project, but it has numerous issues to solve before we would consider it a large player in the DeFi industry. Not only that, but if they undo their rebrand after most investors have converted their tokens, it will be a huge headache to those who believe in it. Regardless, the future of this token is uncertain, so invest if you believe in it, but we won’t blame you if you decide to hold off or pass entirely.