Sky Protocol Proposes 90% Buyback Cut to Fortify $11B Stablecoin

Edgen Crypto

·Mar 11 2026, 00:34

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Key Takeaways

A new governance proposal from Sky Protocol seeks to temporarily slash its native token's buyback program to reinforce the capital reserves of its USDS stablecoin. This move prioritizes long-term stability at the cost of short-term token price support, presenting a critical decision for token holders.

90% Buyback Reduction: The proposal aims to cut the SKY token buyback rate from 75% of net profit to approximately 7.5% for about three months.
$11B Stablecoin Stability: This action is designed to strengthen the capital buffer for the USDS stablecoin, which has a current circulation of around $11 billion.
Token Price Pressure: The drastic reduction in programmatic buying is expected to create significant short-term downward pressure on the SKY token's price ahead of a community vote.

Proposal Slashes SKY Buybacks by 90% to Buffer USDS

Sky Protocol governance has introduced a proposal to dramatically reduce programmatic buybacks of its native SKY token. The plan would cut the portion of net profit used for buybacks from 75% to approximately 7.5% for a period of about three months. The stated goal is to redirect these funds to strengthen the capital buffer for its USDS stablecoin, which currently has a circulation of roughly $11 billion. This defensive maneuver aims to increase the stablecoin's resilience by building a larger capital reserve.

Savings Rate Cut to 3.75% as Governance Vote Looms

In conjunction with the buyback reduction, the proposal also includes a 25 basis point decrease in the Sky Savings Rate, bringing it down to 3.75%. This adjustment further signals the protocol's shift towards a more conservative capital management strategy. The entire proposal is now subject to a community vote, which will remain open until March 12 at 16:00 UTC. The outcome will determine the protocol's financial priorities for the upcoming quarter.

Stability vs. Price: A Clear Trade-Off for SKY Holders

The proposal presents a classic trade-off within a dual-token ecosystem. By bolstering the USDS capital buffer, the protocol could achieve greater long-term stability and user trust. However, this comes at a direct cost to SKY token holders in the short term. The 90% reduction in buybacks removes a primary source of programmatic buying pressure, which will likely exert significant downward force on the token's market price. The vote forces the community to decide between prioritizing the stability of the stablecoin or the immediate market value of the governance token.