Sky (SKY)

Sky currently buys back 300k USD worth of SKY per day, and distributes 250k of it to stakers who rn earn 16.5% yield Also SKY has no emissions or inflation, only token burning of the SKY that is bought back but not distributed

In November, Sky Protocol bought back 154 million SKY using 7.8 million USDS. This brings total buybacks to over 88 million USDS since the program began. https://t.co/yqfgt1HQ3U

Execution risk is real, even for experienced teams. In an effort to provide exit options to embattled stUSDS depositors, Sky set up a Curve pool and added 500k of USDS rewards. Unfortunately the pool is misconfigured, so a new pool with another 500k USDS rewards had to be spun up. $500k mistake. As a reminder, stUSDS is a yield bearing deposit backed only by SKY tokens, where utilization has remained persistently at 100% despite 35% APY. There is also a proposal on the Curve forum to change the pool fee from 1 basis point to 100 bps, since the pool is specifically intended to support liquidity for a distressed asset. Depositors have consistently fled stUSDS since the initial 40% rate was ratched down sub-5%. Despite bone-crunching rate hikes to attract deposits back to the market, depositors have not outpaced withdrawals as stUSDS holders have fled. Notably, the largest borrower also controls Sky governance and has announced that the liquidation threshold will drop from 145% LTV to 120% LTV, in a move t

Sky watchers quietly got a much-needed update on the intended capital structure at Sky, and the seniority of different parties in the event of insolvency. For a given Star X, losses flow thusly (first loss at top of the list): Star X (fully liquidated) ⬇️ SKY (dilution) ⬇️ Stars Y, Z, etc (clawback of funds) ⬇️ USDS/DAI holders Notably, if SKY is diluted to $0 and the sibling Stars or stablecoin holders bear the final losses, a new supply of gov tokens is supposed to be airdropped to those stakeholders. I like this in principle, although it’s not clear what enforces the wipeout of SKY and handing the keys to creditors. This confirms my earlier intuition that Stars are exposed to the risks of their peers. What I would not have guessed, however, is positioning SKY as junior to solvent Stars. Given how Sky has consolidated the accounting of Stars to date - indicating they view 100% of those assets as owned