- Maker has lost almost half its value since its eponymous protocol rebranded to Sky.
- Founder Rune Christensen said he underestimated the importance of centralised exchanges.
Sky founder Rune Christensen said he made a “typical DeFi mistake” when he pushed a rebrand that saw the storied stablecoin issuer ditch the Maker name in August.
During a live forum on X on Tuesday where he alternated between defiance and introspection, Christensen said he assumed centralised exchanges like Coinbase and Binance would list Sky’s new governance token.
“That just didn’t happen,” he said. “I totally underestimated how important centralised exchanges are nowadays.”
The overhaul was supposed to take decentralised finance mainstream by introducing a cohesive, user-friendly brand, new tokens, and new ways to earn yield.
While its new USDS stablecoin is already one of the largest, with a market value over $1.1 billion, its governance tokens have lost almost half their combined value.
In a stunning about-face, Christensen proposed on Monday to ditch the Sky brand and return to Maker. On Tuesday, he hopped on a live forum on X to celebrate what the effort accomplished and to contemplate where it went wrong.
Why Sky?
Maker was confusing, Christensen argued since he first proposed the overhaul in 2022. Control of the protocol belongs to people who own its governance token, Maker. But its purpose is to mint a dollar-pegged stablecoin, DAI.
While both were well-known to crypto die-hards, regular people might not know that the governance token and the stablecoin were related, he said. Some might not even know DAI was a stablecoin designed to always hold a value of $1 — after all, most have “USD” in their name.
Even though DAI had long been the largest decentralised stablecoin — an alternative to those that can be frozen or seized by their issuers — its supply had stalled at about $5 billion amid intense competition from centralised incumbents run by Tether and Circle, as well as newcomers from Ethena and PayPal.
The rebrand was part of a much larger overhaul, dubbed Endgame. In addition to taking DeFi mainstream, Endgame was meant to boost participation in MakerDAO, the cooperative that ran the Maker protocol.
After contentious debates, a developer exodus, and some two years of work that cost about $5 million, according to one estimate, Maker announced in August it had become Sky. Holders of Maker and DAI could convert those tokens to Sky and USDS tokens, respectively.
There were other changes, and Christensen said they aren’t going anywhere.
“Sky Launch wasn’t a rebrand, it was a huge amount of features,” he wrote on X Wednesday.
The results
The results have been mixed.
While USDS has a market value over $1.1 billion, Sky’s is below $60 million, a lacklustre debut for a token designed for mass appeal.
Maker, meanwhile, has taken a massive hit, its value falling almost 50% to $1,200 since the rebrand was unveiled.
Christensen said the quick growth of USDS has been “momentous,” in part because it wasn’t necessarily “cannibalising the DAI demand.”
“This is actually net new demand, resulting in total inflows into the system of something like six to $700 million,” he said.
“A lot of people are going to enjoy dunking on me,” he said of his about-face. “But ultimately, … the purpose of the rebrand was to try to tap into new users and create net new demand. And that clearly succeeded.”
But the SKY token bombed.
“I thought that if you do a redenomination, and it has a cool ticker and all that, … that would appeal to a new group of potential users,” Christensen said. “And clearly that didn’t work out at all.”
Meanwhile, users were confused by a protocol that now featured four separate tokens — Maker, Sky, DAI, and USDS — with overlapping functions.
‘Full classic’?
Christensen said he will create a poll by the end of the week asking people to choose between two potential fixes.
The first is a return to the Maker brand featuring “extremely, extremely light touch” changes “like improving the font and making some changes to the colouring.”
The second is to “go full classic” and undo the rebrand entirely.
“Really all it changes is that it goes from Sky - formerly Maker,” he wrote Wednesday, “to Sky - powered by Maker.”
As for Sky, it could become a “spin off front end that just kind of lives on its own,” or a so-called subDAO, like Sky’s in-house lending protocol, Spark.
Vance Spencer, co-founder of crypto venture capital firm Framework Ventures, also spoke Tuesday. He said Framework was “one of the larger holders of Maker.”
“USDS is a wonderful success story, and it’s going to continue to grow,” Spencer said.
“We’ve confused people. [The rebrand] was definitely a shot on goal that was worth taking. Refocusing, recentering around the Maker brand is, I think, smart.”
Aleksandar Gilbert is a DeFi Correspondent at DL News. Got a tip? Email at aleks@dlnews.com.