Rune Christensen, the co-founder of Sky (formerly MakerDAO), announced he is formulating a proposal for “strictly deflationary tokenomics” to cease token emissions and reduce the total supply.
Christensen’s objective is to prevent token emissions from occurring “under normal circumstances,” irrespective of whether the primary token remains as Maker or is rebranded as SKY per the new brand.
The new token structure would guarantee a firing mechanism and long-term supply reduction under the original tokenomics model of MakerDAO back the selected token.
This new proposal would further the original model by reinforcing the supply reduction concept and pursuing its objective of reducing inflation and enhancing stability.
Strictly Deflationary Tokenomics
Christensen’s proposal primarily targets implementing a “burn-only” deflationary model, which involves a systematic burn mechanism that gradually diminishes the central token supply.
Under typical circumstances, the token supply would decrease as no new tokens would be issued except in emergencies, in which case additional tokens could be issued.
The Sky co-founder defines This ” emergency ” as an event that could potentially result in the insolvency of stablecoins USDS or Dai, such as a collateral shortfall, where there are insufficient assets to cover debts.
Rewarding value
Christensen also incorporates a reward structure to enhance token value and encourage participation, in addition to the deflationary model proposal.
The rewards system would enable holders to acquire “Star Token Rewards, such as Spark SPK, through Activation,” regardless of whether the primary token remains MKR or transitions to SKY.
The co-founder noted that “committed governance participants who utilize the Seal Engine” would also be eligible for “more valuable rewards, including USDS Rewards and Star Tokens.”
Forthcoming Governance Referendum
The governance vote between November 11 and 14 will determine whether MKR or SKY will serve as the primary token. Christensen’s proposal is a precursor to this vote.
The community contemplated reverting to its original Maker moniker in response to negative feedback and confusion regarding its August rebrand to Sky, prompting the vote.
Christensen stated in his Nov. 4 X post that this most recent proposal would enable the ecosystem to “move forward and focus on growing the fundamentals” by providing renewed clarity regarding the protocol’s future direction.
