Established Decentralized Finance protocol Rebrands, Interpreting the Deeper Meaning Behind It

The decentralized finance lending protocol born on Ethereum in 2014 has a large user base and high recognition in the cryptocurrency field. Its stablecoin ranks third in the market, only behind USDT and USDC, with a market capitalization of as much as $5.36 billion.

Recently, the protocol announced a rebranding, changing its name to Sky Protocol, and made significant upgrades to its governance token and stablecoin. Specifically, the original governance token will be upgraded to the new SKY, while the stablecoin will be upgraded to the new USDS (Sky Dollar).

What major changes have come with this brand overhaul?

Governance Token: New Proportion Exchange

The exchange ratio between the original governance token and the new token SKY is 1:24,000. This fixed ratio ensures that holders can obtain the corresponding amount of the new governance token SKY after the conversion. As of the time of publication, the price of the original token is approximately 1913 USDT, corresponding to a price of 0.0797 USDT for the split SKY.

Stablecoin: Maintaining value continuity

The 1:1 exchange ratio between old and new stablecoins ensures the continuity of the stablecoin's value. Users can choose to exchange directly or seamlessly exchange for USDS via ETH, USDC, and USDT on the official website. The exchange will open on September 18.

It is worth noting that the upgraded USDS will have a freezing function, which was not available before. This means that USDS adds some centralized features on top of its decentralized foundation. When encountering issues such as transfer errors or theft, users can seek help from the protocol to freeze the relevant addresses.

User autonomy

The token upgrade is voluntary, allowing users to decide whether to convert their original tokens into the new tokens. This gives community members more options. For users holding the original governance tokens, they will retain their corresponding governance rights after converting to SKY. Sky promises that the new governance model will be more efficient and transparent. Additionally, the original tokens will continue to circulate alongside the new tokens.

To encourage user participation, the team has launched a reward mechanism: users who complete the token migration during the testing period will receive a reward of 1.25 times in SKY and USDS tokens.

Subprotocol Renaming

As part of the brand restructuring, the original sub-protocol will be renamed Sky Stars, maintaining its independence as a decentralized project, connecting the Sky ecosystem through its unique business model and autonomy.

The first launched sub-protocol is Spark, an open-source decentralized liquidity protocol that currently offers a 6% yield for users depositing tokens, while allowing users to borrow USDS at a 7% interest rate.

According to data platform statistics, there are currently 443 DeFi lending protocols, with a total locked value (TVL) exceeding $31.3 billion, ranking second, only behind liquidity staking protocols. Among these lending protocols, Spark currently ranks third, with a total locked value of $2.43 billion, having decreased by nearly 24% in the past month.

The deeper reasons for brand reshaping

The co-founder of the protocol stated that this brand overhaul is a key step in the "next evolution of DeFi." The construction of the new protocol focuses on simplicity and ease of use, enabling users to enjoy innovative features such as Sky Token Rewards (STRs) and Sky Savings Rate (SSR) in eligible jurisdictions.

Firstly, with the increasingly strict regulatory environment, especially in the United States, decentralized stablecoins are facing unprecedented challenges. To address these challenges, the protocol needs to reposition itself. A name change can help the project gain greater flexibility in the new regulatory environment, avoiding the limitations brought by its past identity.

Secondly, the rebranding is not only a change of brand but also represents a comprehensive innovation in the underlying technological architecture. The protocol aims to enhance overall performance by improving smart contracts, optimizing governance mechanisms, and increasing system scalability. To reflect this thorough technological transformation, adopting a completely new brand image is essential.

Thirdly, in order to attract a broader user base, especially those who are less familiar with cryptocurrency, simplifying brand recognition is crucial. The original name may seem complex and difficult to understand for outsiders, while "Sky" is more concise and memorable, which helps in the wider promotion and popularization of stablecoins.

Overall, this brand transformation has not only helped the protocol adapt to regulatory and technological changes but also effectively expanded its user base. Through this series of changes, Sky Protocol is expected to lead the next wave of innovation in the Decentralized Finance space.