🟣 Maker vs. Sky

Plus, blobs are burning ETH

Author

Donovan Choy
October 23, 2024

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Welcome back to 0xResearch. Here's what we’ve got for you today:

  • Sky making a U-turn?

  • Chart: Blob fees are burning ETH

Sky mulls a re-rebrand

USDS is doing great. The SKY governance token, however...not so much.

About two months since Maker’s announced rebrand to Sky, the team is now contemplating a U-turn.

Maker first revealed its rebrand to Sky in late August and went live on Sept. 24. The rebrand was intended for holders of the original MKR governance token to convert to the new SKY governance token at a 1-to-24,000 exchange rate. 

Since going live, only about 10.7% of MKR token holders have converted to the new SKY governance token.

Usage of USDS has had a relatively more positive reception, with its growth to a $1.26 billion market cap.

Rune Christensen, Maker’s co-founder, tweeted: “It is also now more clear than ever just how much the DeFi community loves and trusts the Maker brand…there is a lot of commitment to holding the MKR token versus upgrading to SKY.”

As Christensen explained, the Maker team will have three voting options on Oct. 28: 

  1. Continue with Sky as the core brand.

  2. Make a full U-turn to Maker’s original brand identity.

  3. Return to Maker’s original branding, but lightly update it “to better align it with USDS and the StarDAOs.”

The redenomination into a higher token supply from MKR to SKY was widely perceived by many as a kind of positive psychological catalyst that plays on what is commonly referred to as “unit bias.”

The idea here is that investors may find MKR less appealing due to its high price — over $1,000 per MKR — while the significantly lower price of SKY, at a few cents (due to its higher total token supply) makes it more psychologically attractive for retail investors to hold compared to fractional amounts of MKR.

Christensen acknowledged on an X space yesterday that this redenomination strategy “clearly did not work out at all” after the SKY token failed to get listed on centralized exchanges.

To incentivize this conversion, Sky planned to offer “seal rewards” and “activation rewards” for token holders who chose to stake SKY — features that Christensen now points to as “hard to follow” amid a swathe of new features based on community feedback.

Critics on X have wasted no time taking shots at Maker for wasting $50 million on a failed rebrand.

In response, Christensen acknowledged on yesterday’s X space that the criticism was a “funny meme” and while he doesn’t “blame people for using that as a dunk,” the entire sum of money was not spent exclusively on “rebranding.”

Christensen elaborated that the value of the rebrand was to drive demand for the USDS stablecoin and the importance of the product’s adoption, which has shown success thus far.

Since the Sky rebrand, the team has embarked on a series of high-profile launches, such as an integration of USDS with Aave (dubbed the Sky Aave Force), and the launch of USDS to Solana and other Ethereum L2s.

— Donovan Choy (X: @donovanchoy | Farcaster: @donovan)

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Blob fees are burning ETH:

As blob data neared its target limits in the last week, blob fees have burned about 5.71 ETH ($15k USD) in the last 30 days. According to rollup.wtf, blobs cost about $0.28 per kilobyte briefly yesterday, though prices have since fallen back down to zero.

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Despite Off The Grid’s early success through a well-planned marketing campaign, it currently lacks a native token. While AVAX could be considered a way to gain exposure, the economics don't align, once again highlighting the recurring issue with modular networks: They often undercharge their customers, failing to fully capitalize on their product's value.

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The insights, views and outlooks presented in the report are not to be taken as financial advice. Blockworks Research analysts are not registered broker/dealers or financial advisors. Blockworks Research analysts may hold assets mentioned in this report, further outlined in the Firm’s Financial Disclosures.