MKR is the ERC-20 token that governed MakerDAO, the Ethereum protocol that issues the DAI stablecoin. It is no longer the protocol's governance token. MakerDAO rebranded to Sky in 2024, and Sky governance later made SKY its sole governance token. MKR can no longer be used to vote. Holders can convert each MKR into 24,000 SKY, but only one way. Since September 2025 a Delayed Upgrade Penalty has cut the SKY paid per MKR. Sky says the cut reached 4% on 4 June 2026, so 1 MKR now converts to 23,040 SKY, and it rises by one percentage point every three months.
The rest of this guide explains what MKR did, why it lost its role, and what a holder can check today.
The current state of MKR (October 2026)
| Item | Status | Source |
|---|---|---|
| Governance | SKY is the sole governance token; MKR cannot vote | Sky upgrade page; Sky blog, 18 Aug 2026 |
| Conversion rate | 1 MKR = 24,000 SKY, before any penalty | Sky upgrade page |
| Direction | One-way; SKY cannot be converted back to MKR through the protocol | Sky upgrade page |
| Penalty start | 0% before 22 September 2025, then 1% | Sky upgrade page |
| Penalty now | 4% from 4 June 2026, according to Sky's August 2026 post | Sky blog |
| Penalty schedule | Rises 1 point every three months, reaching 100% after 25 years | Sky upgrade page |
| Deadline | None, but the penalty keeps growing | Sky upgrade page |
| MKR on-chain supply | About 82,790 MKR, per Etherscan on 25 October 2026 | Etherscan |
Under the quarterly schedule, the penalty would have risen again after June 2026. We could not confirm a later rate from a primary source. Check the official upgrade page before converting. Sky also says governance can change or remove the penalty by vote.
The official MKR contract on Ethereum mainnet is 0x9f8F72aA9304c8B593d555F12eF6589cC3A579A2. Tokens at any other address are not MKR.
How we got here: Maker to Sky
The rebrand (2024)
On 27 August 2024, The Block reported that MakerDAO had rebranded to Sky. Under its "Endgame" plan, DAI could be upgraded 1:1 to a new stablecoin, USDS, and MKR to SKY at 1:24,000. The new tokens were scheduled to roll out on 18 September 2024. At that stage, both upgrades were optional, and USDS could be swapped back to DAI 1:1.
Governance moves to SKY (2025)
A Maker governance executive proposal dated 15 May 2025 set out phase one of the MKR-to-SKY upgrade:
- A new Chief voting contract that counts SKY instead of MKR, with a launch threshold of 2.4 billion SKY (equal to 100,000 MKR).
- A new delegate factory, so SKY holders and stakers can delegate their votes.
- The old SKY-to-MKR conversion was switched off. A one-way MKR-to-SKY converter at 1:24,000 replaced it, with the penalty initially at 0%.
- MKR debt auctions ("flop" auctions) and the Emergency Shutdown Module were to be disabled.
Sky's developer documentation says the old DSChief and V2 delegate contracts stop accruing voting weight once the new Chief is ratified, and only SKY counts in it. Sky's upgrade page now states that SKY "has been voted in as the sole governance token." It tells MKR holders to withdraw MKR from the old Chief contract, or undelegate it, through the Maker governance portal.
What SKY inherits
Sky describes SKY as an ERC-20 governance token with a maximum supply of 23.46 billion and new emissions permanently disabled. Staking rewards are funded by the Smart Burn Engine, which uses protocol surplus to buy SKY on the open market. Governance parameters decide whether repurchased tokens are burned or redistributed to stakers.
What MKR did: the original design
MKR's design explains why the protocol was built the way it was. It also explains what SKY now carries. The definitions below come from the Maker/Sky whitepaper.
DAI and Vaults
DAI is a stablecoin backed by crypto collateral and soft-pegged to the US dollar. Users lock collateral in a Vault (formerly called a CDP) and generate DAI against it. They repay the DAI plus the Stability Fee, an annual rate charged on top of the Vault's debt, to unlock their collateral.
Each collateral type has a Liquidation Ratio: the collateral-to-debt level below which a Vault can be liquidated. When that happens, a Liquidation Penalty is added to the debt. The collateral is then sold in a collateral auction for DAI to cover the debt and the penalty. Governance sets these parameters for each collateral type and changes them over time. Check the live values rather than relying on a fixed number.
Three jobs for MKR
- Governance. MKR holders voted on collateral types, debt ceilings, stability fees, the Dai Savings Rate and other risk parameters. Votes were weighted by tokens, not by voters. Non-binding polls measured sentiment. In binding Executive Votes, holders locked MKR behind a proposal, and after a security delay it changed the live contracts.
- Value capture through burns. In surplus auctions, bidders paid MKR for the surplus DAI from stability fees. That MKR was destroyed, which reduced supply.
- Backstop through dilution. If the system ran short of DAI, debt auctions minted new MKR and sold it for DAI to recapitalise the protocol. Bad governance therefore cost holders directly.
Price-feed protection
The Oracle Security Module delays new collateral prices by one hour. That gives emergency oracles or a governance vote time to freeze a compromised feed before it causes wrong liquidations.
How much SKY would your MKR get?
Enter how much MKR you hold and the Delayed Upgrade Penalty shown on Sky's official upgrade page to see the SKY you would receive.
| MKR you would convert | Delayed Upgrade Penalty at the time you convert | SKY received |
|---|---|---|
| 1 MKR | 4 % | 23,040 SKY |
| 1 MKR | 0 % | 24,000 SKY |
| 1 MKR | 1 % | 23,760 SKY |
- The 1 MKR = 24,000 SKY base rate comes from Sky's upgrade page; the penalty cuts the SKY paid per MKR.
- The penalty was 0% before 22 September 2025, then 1%, and 4% from 4 June 2026. Sky says governance can change or remove it by vote.
- Conversion is one-way: SKY cannot be converted back to MKR through the protocol.
This is arithmetic on your inputs only: it does not know today's penalty rate, leaves out network fees and tax, does not check that you are using the official MKR contract or converter, and does not say whether converting is right for you.
The stress test: 12 March 2020
The backstop was used for real once. According to Glassnode:
- ETH fell about 43% in one day, from $194 to $111.
- Ethereum gas prices spiked and blocks were congested. Some liquidation bots won collateral auctions with zero-DAI bids, and more than $8 million of ETH was sold this way.
- At least $4.5 million of DAI was left without collateral.
- The protocol scheduled a debt auction for 19 March 2020, minting new MKR and selling it for DAI to cover the gap.
Afterwards the auction system was redesigned. The episode shows that "MKR supply only goes down" was never guaranteed: the supply could expand when the system failed.
Timeline
| Date | Event | Source |
|---|---|---|
| December 2017 | Single-Collateral DAI (later "Sai") launches, backed only by ETH | The Block |
| 18 November 2019 | Multi-Collateral DAI goes live; first collateral ETH and BAT; Dai Savings Rate introduced | The Block |
| 12 March 2020 | ETH crash, zero-bid auctions, MKR debt auction follows | Glassnode |
| May 2020 | Sai system shut down | The Block |
| July 2021 | Plan to dissolve the Maker Foundation reported; foundation returns 84,000 MKR development funds to the DAO | FXStreet |
| 27 August 2024 | MakerDAO rebrands to Sky; USDS and SKY announced | The Block |
| 15 May 2025 | Executive proposal for MKR-to-SKY upgrade phase one | Maker governance portal |
| 22 September 2025 | Delayed Upgrade Penalty starts at 1% | Sky upgrade page |
| 4 June 2026 | Penalty reaches 4% | Sky blog |
What an MKR holder can check now
- Where your MKR sits. MKR locked in the old governance contract earns no voting weight. Sky's documentation says withdrawing it from DSChief takes two transactions.
- The current penalty. Read it on the official upgrade page before converting. The amount of SKY per MKR falls with each quarterly step.
- That conversion is final. SKY cannot be turned back into MKR through the protocol.
- Contract addresses. Use the MKR address above and the converter linked from Sky's official pages. Fake tokens and look-alike upgrade sites are a known risk around token migrations.
- Old staking positions. Sky's documentation says MKR cannot be locked directly in the V2 Staking Engine. V1 positions must be closed or migrated, and MKR converted to SKY first.
Risks that still apply
- Smart contract risk. Bugs can exist in audited code, and migrations add new contracts.
- Governance concentration. Token-weighted voting lets large holders dominate when turnout is low.
- Liquidation cascades. March 2020 showed that fast price falls and congested networks can overwhelm auctions.
- Parameter changes. Governance can change fees, ratios, rewards and the upgrade penalty.
Limitations: this guide relies on Sky's own pages for the upgrade terms, on secondary reporting for the 2017–2021 history, and has no confirmed penalty rate after June 2026; it is not investment advice.
