Sky (SKY)

Sky recently reduced its buybacks and staking rewards significantly

--> buybacks from 75% of profits to 7.5%
--> staking rewards from 12% APY to ~4%

even though they just had their best quarter in history

retail hates this, institutions love this

here's why this is bullish

Sky governance released multiple statements saying that they have decided to prioritize capital retention over capital distribution

meaning, they want to focus on using protocol profits to build a more robust protocol and a better product over distributing profits to investors

what is the product Sky is building?

Trust

and in financial services, trust is everything

look what happened 2 weeks ago with $AAVE. Billions of capital flowed out of AAVE because their customers lost trust

the same with Ethena in October

this happened with silicon valley bank in 2023, it happened with FTX in 2022 and has happened many many times with financial companies before it

the best financial products are the products that don't lose customer funds

Sky, Ethena, and Ondo are about to get rebuilt from the ground up.

The new CLARITY draft kills the 5-year playbook of launch a token, avoid US users, and hope nobody calls it a security.

Here's what changes and the tokens to watch:

The biggest fight is stablecoin yield. The latest draft blocks rewards that look like bank deposit interest but allows rewards tied to real user activity. Passive yield gets killed, but activity-based rewards survive.

Sky, Ethena, and Ondo can't run a "hold this and earn" product anymore. The model has to shift toward things users can prove they did. Staking, voting, providing liquidity, actually using the protocol.

Token launches get a harder reset too. CLARITY requires early registration, more disclosure, and a maturity process before an asset gets treated like a commodity (which is the cleaner regulatory bucket every project wants to land in).

RWAs get pulled in. If you're tokenizing treasuries, credit, or real estate, the retail-friendly DeFi wrapper gets harder to mainta

I was thinking about these changes...

> almost no way to spin it nicely for $SKY holders now
> a hard but needed change to ensure some sustainability in the form of a solvency reserve
> despite token transparency framework which could be the norm, the solvency reserve should also be included in it

Basically how I see it → short-term pain, long-term gain.