Next Big Crypto: Sky's Deflationary Roadmap

Sky has made a name for itself as a productive DeFi project, becoming the buzz around its proposed deflationary token model and potentially the next big crypto. It has a roadmap laid out for 2025 that is focused on supply reductions through buybacks and burning mechanisms intended to decrease how many tokens are available to enhance scarcity and value in the long run. In search of a differentiator that has strong fundamentals for assets that may be less volatile than others as the market recovers from the selloff experienced earlier this year, the case created by Sky is compelling. The project, formerly MakerDAO, provides stability and efficiency giving it the potential to be relevant to users that utilize DeFi tools and are looking for a protocol that will be productive after their shift. PwC predicted in a report the crypto industry's total market capitalization will reach $5 trillion by 2030. Protocols like Sky that prioritize de-inflationary economics demonstrate a plan for long-term capital inflows compared to other crypto protocols that do not pursue deflationary economies.

The topic of deflation arrives as inflation, the degradation of a token's value over time, has plagued many projects popularity over the last year. The deflationary roadmap plans to counter this by decreasing the supply of the token with structured reductions, while potentially creating price appreciation depending on the growth trajectory of an adoption plan. For those of you weighing investment options, the integration of governance models with economy incentives shows a fair balance perceived by the community. The structure of governance decisions being delivered by a community ratification provides a solid reason for a token holder with stake in the deflationary model. As we explore this roadmap, it is easy to see how SKY could be the next crypto to watch to evaluate Sky's potential competently, the first step is to review its performance history found on CoinMarketCap and similar sites. This step includes reviewing trading volume and holder dispersion, both of which have steadily increased into 2025.

• Review the number of daily active addresses to see levels of users engaging with SKY.
• Assess the relative valuation of the SKY market cap versus its peer MKR.
• Take a look at the on-chain data on Dune Analytics to assess the trend in transactions.

Following all the analytical steps above will allow for a more robust basis of analytical actions for your investment.

Background of Sky Protocol and the MakerDAo Rebranding

Sky Protocol is the next iteration of MakerDAo, the one of the first influential DeFi applications representative of the DAI stablecoin type. The rebranding took place in August 2024, allowing Maker to further enhance productivity with new features and simplifications that were in demand within the DeFi landscape. Among other changes, the Sky token launched as a governing asset, incorporating some deflationary elements to benefit long-term holders as part of the governance rights. MakerDAo to Sky is not truly aesthetic in nature. The protocol utilized the rebranding to enhance its architecture in ways necessary to improve output of stablecoins and enhance credit promoted by the protocol.

The rebranding has allowed Sky Protocol to increase its vision in meaningful waysThe rebranding indicates a dedication to innovation, making SKY a more functional token than the last token, DAI.

Also, to compare Sky to other DEFI protocols, one would need to assess:

• Protocol TVL post brand reconstitution over 10bn;
• If it will work with one of the largest wallets, MetaMask,
• Lastly, the progression from MKR to SKY allowing holders to bridge this transition.

These modes of comparison outline Sky’s position clearly.

What were the significant improvements from making it Sky?

In the transition to Sky, there were some distinct changes to the deflationary roadmap. First, the protocol has allowed the stablecoin, USDS, to enable upgrades that let it yield as well. This gives our users to earn interest directly upon USDS as opposed to DAIs static. Second, Governance ensues further into decentralized Stars, so each subDAO governs their treasury, making decisions as needed. This reduces risks associated with centralization but allows for specialization. Utility:

Another point of importance is the token conversion process that when MKR holders, decide to bridge to a fixed ratio of SKY – to be deliberate, because once completed their transition will penalize their decision to not migrate and adhere to MKR. This is explained on the official Sky site at sky.money - to ease the shift. The conversions and burns will support a decline in the macroeconomics.

Fundamentals whole of a Deflationary Token Model

The deflationary token model is implemented to decrease the circulating supply over time, usually through burns or buybacks, and/or increase the price (based on the notion of flat or increasing demand). Within crypto typically to achieve this given that the process of minting unlimited tokens diminishes the value of existing or pre-mined tokens, the deflationary token model is designed to mitigate inflationary pressures as experienced in many protocols. As previously mentioned, the introduction of deflationary mechanisms from day one within the Sky project is consistent with this idea – to (attempt) create scarcity on behalf of the holders of SKY.

The model generally involves automated burns resulting from transaction fees, or voluntary forms to influence locking tokens for rewards, engaging holders of assets as opposed to consumers, which stimulate a degree of stability in the token economy. For Sky as a definitive product, deflationary token model(s) will be embedded in the roadmap for 2025 while continuing to maintain scarcity of the original SKY issued over the life of the project. There are a number of projects that have shown success with deflationary token models (i.e., BNB) where the project used periodic burns, in a constant process of usage redundantly increasing value over time, as was demonstrated in CryptoCompare reports.

In order to maximize the effect(s) of a deflationary token model it is important for the projects to calibrate their efforts on the for the supply contract to utility, or it stagnates/plateaus.

• Clarify burn percentages, which can have a direct tie from internal fees for minting transparency.
• To be explicit staking provides an incentive for holders when the supply contracts; which will likely see a resurgence in demand in a reasonably disclosed time period.
• Measure market activity over time in relation to burn percentages and associated to make adjustment to the token supply process over time.

The fundamentals can ensure the model functions.

How Deflationary Mechanisms Work in Crypto

It operates systematically or on a pro-rata merit basis on either a pre-determined or user contract to eliminate (burn) tokens, which implements scarcity, and builds demand. For Sky, mechanisms include revenue-based buybacks and burns linked to transaction volume. When protocol fees are derived from stablecoin operations, some of these fees are utilized to buy SKY from an open market, which are then burned or accrued as distributions to holders. This mechanism is facilitated through use of smart contracts, making it consistent without any manual action. As an example, if the protocol were to earn fees beyond a certain threshold, the contract would execute a buyback, lowering the available supply. This tactic has worked for them, and others, to support token value when the market is contracting - as was seen with other tokens operating similar eco-systems like LUNA, prior to its collapse - despite the governance strategy in place to protect against such an event if/when Sky encounters some of the same challenges.

Simply stated, it is time to elaborate on what these mechanisms look like in practice.

• Transaction burns: A small percentage of fees is permanently removed from supply.
• Revenue-based buybacks: Profits from lending are used to repurchase and burn token supply.
• Voluntary locks: Users stake tokens for yield, temporarily removing the token supply from circulation.

The practices described above illustrate how Sky approaches those mechanisms in practice.

Exploring the Deflationary Tactics of Sky

Sky's deflationary mechanisms are diverse and engineered to create lower SKAY supply while encouraging participatory features. The main defense is that revenues earned from the protocol's stablecoin and lending will be spent onIn 2025, Sky has developed these strategies via subDAOs in which each Star can have its own reduction scheme, using lock-ups via fees as an example. Each Star’s reduction can be more specific to a market segment due to this decentralization.

Initiatives such as voluntary burns, where users can contribute tokens that are rewarded to them, have also engaged the community. These projects have a 5% reduction of circulating supply so far this year, based on on-chain analytics.

Here are a few examples of initiatives.

• Governance staking, locks tokens for the risk of missing votes.
• Fee rebates that incentivized the burn option over the withdraw option.
• Partnership program, where allied projects provided to supply cuts.

These initiatives are in line with the goal of deflation.

The 2025 Roadmap for SKY Token

Sky’s 2025 roadmap indicates a variety of milestones on the agenda towards amplifying the deflationary impact while expanding the ecosystem as a whole. On the roadmap, there is to be acceleration of the MKR to SKY migration, enabling penalties for delays, and a complete migration expected by half time of the year. This is expected to streamline the supply with SKY and accelerate the impact of deflation. It will also include the launch of new subDAOs and the use tokens generated from revenues of each buy back, contributing to buybacks.

There will also be technical upgrades to increase fee generation, with new lending algorithms that increase the income generated by the protocol. Steps on the roadmap are outlined in Sky’s official documentation available at sky.money/roadmap, with clear documentation for investors where the roadmap provides a clear outline for time frames.

To follow the roadmap; timeframes can be outlined as follows to track bookmarks as the roadmap progresses.

• Q1: All migration penalties completed.
• Q2: At least two new Stars are created with revenue sharing.
• Q3: All auditing completed and implemented fee mechanisms.

These milestones can be used to set expectations.

Keel as a New Star in the Ecosystem

Keel emerged as a new Star in September 2025 and focuses on tokenized credit strategies and has a liquidity roadmap of $2.5 billion. This Star is fully autonomous, utilizing funding for high-yield opportunities while still supporting SKY buybacks. Keel is focused on real-world assets to continue adding diversification to Sky for potential institutional interest.

As a Star, Keel has its own treasury that was funded on initiation from Sky's ecosystem reserves. This means Keel can act independently and its revenues will feed back into Sky the protocol at large. To read more about Keel and their strategy, refer to the announcement at sky.money/keel. Here are Keel's features.

• Deployment of credit in optimized DeFi pools.
• revenue allocated to SKY burns for deflation.
• governance specific to credit risk parameters.

These features add to the ecosystem.

Migration from MKR to SKY

Migration from MKR to SKY is a central theme for the 2025 roadmap as we will give incentives to get users migrated. Holders will be able to convert MKR to SKY at a 1:24,000 ratio. If users take time, they will incur penalties if delayed, reducing the effective rate their MKR converts at the longer they wait. This is meant to expedite users to convert to SKY to consolidate value under the SKY protocol and support deflation by burning unclaimed tokens.

The migration process will be created through the Sky app, with tutorials to be available. This will offer users a clear process to follow to reduce interruptions while enforcing the deflationary agenda.

Follow these steps for migration.

• Connect your wallet to the Sky migration portal.
• Approve MKR tokens for transfer.
• Confirm the transaction to receive SKY.

These instructions will facilitate migration.

Possibly Market Implications of Sky's Roadmap

Sky's deflationary roadmap may represent a very strong market implication by increasing scarcity of SKY tokens, potentially at higher prices as demand increases. As migration completes in 2025, consolidated supply for SKY may lessen selling pressure among legacy holders. Analysts from CoinDesk speculate that price could increase by 50% if buybacks exceed expectations based on their models for other tokens like BNB.

The roadmap focuses on generating revenue from subDAOs like Keel as additional revenue streams also contributing to deflation. This could solidify SKY as a leading cryptocurrency in the governance token category.

In addition to buybacks, consider the following indicators for measuring impact.

• Changes in token supply post-migration.
• Revenue growth from new Stars.
• Market sentiment based on social metrics.

All indicators above track impacts.

Price Projections for SKY at 2025

Price projections for SKY at 2025 vary considerably in optimism, with the bullish side of forecasts estimating prices as high as $0.10 based on the deflationary aspects being successful. Based on a steady deflationary rate of $0.07 by CoinCodex, other reasonable estimates are more toward averages of $0.07 given draft revenue estimates assuming migration proceeds as steady as planned ($0.06 stated by Veras on Reddit, @Seismic, 2022) will have some impact, as well, as the broader market moves are weighed in and potentially DeFi recovery needs to be taken into account.

Price projections are based on all indicators, including price inflow assumptions for ETFs and regulatory clarity.

Estimates will end up as follows.

• Low: $0.05 if migration delays occur.
• Medium: $0.07 with progression as moderate.
• High: $0.10 if buybacks accelerate.

Prices above represent reasonable expectations.

How to engage with Sky's Ecosystem

The first step in any engagement of Sky's ecosystem starts as any token holder must engage, by acquiring SKY tokens from a decentralized exchange, using Uniswap. Once owned, users can stake for yields, or vote in governance. The protocol's app provides dashboards for tracking positions.

For first-time users, the migration portal offers guides on converting MKR.

To engage in various forms of participation, use the following approaches.

• Establish a wallet that works with Ethereum.
• Engage in governance forums for conversations regarding proposals.
• Stake SKY into subDAO pools for rewards.

Following these paths enables you to participate in the ecosystem.

Steps For Beginners

Beginners can access Sky's ecosystem through first learning the basics of minting DAI (now USDS) too. Then, they can purchase SKY and learn about subDAOs.

Listing steps for beginners:

• Open up a wallet, like MetaMask.
• Buy SKY on a DEX.
• Stake in the safety module and earn a yield.

Following this simple process provides an entry point into SKY’s ecosystem.

Risks & Investor Considerations

Investing in Sky is not without risk, such as the risk of protocol exploits or simple bad market conditions. Although the team has an aggressive, and even deflationary roadmap that offsets some of this risk through burns, the price will still react to volatility.

Another consideration for investors is to make sure they don’t miss any migration deadlines, as penalties could dilute their value.

To help remain cautious around risk and re-manage exposure, consider these approaches:

• Diversify across DeFi tokens.
• Set stop-loss orders on exchanges.
• Remain abreast of governance proposals and changes.

Using these strategies lessens exposure.

Conclusion

Sky’s vision of a deflationary roadmap is a worthy pretender for the next leading crypto currency, with methodologies such as buyback, or migration, that are both meant to create scarcity and yield value. The protocol’s iteration from MakerDAO and the introduced subDAOs are producing solid mechanisms for persistence, and long-term growth in DeFi. This not only rewards our holders in an economically reduced supply, but expands the ecosystem to incentivize additional members to the community.

The upcoming 2025 roadmap, which includes new Stars and revenue sharing, speaks to the team’s long-standing goal to upgrade functionality. Increased adoption should fuel the utility of SKY in governance and securing yields, in turn driving significant price appreciation. The person who can put all of these moving parts together, will find conviction in a maturing markets equity position.

In summary, a continued aggressive dedication to a deflationary economy is an asset in the crypto space to combat current inflationary pressures.