The digital cooperative governing the Sky DeFi protocol has voted to reduce its daily token buyback program by roughly 87%, from $300,000 to $37,600. Founder Rune Christensen suggested this three-month measure is a precaution due to geopolitical instability, while critics argue it was needed to address a low capital buffer supporting the protocol’s USDS and DAI stablecoins. The buyback program had cost over $116 million since February 2025 to incentive governance participation, even as the stablecoins’ collective surplus buffer remained at about $50 million.
The digital cooperative running Sky voted to slash its daily buyback program from $300,000 to $37,600, a reduction of about 87%. This three-month change aims to strengthen the reserves backing its stablecoins, USDS and DAI.
Founder Rune Christensen stated the move is a necessary precaution, writing “The world is about to experience a massive oil shock and a lot of financial infrastructure will break from this.” Critics, however, contend the action was overdue given the protocol’s limited backstop capital.
The supply of USDS has grown more than 22% over 30 days to about $7.9 billion, while DAI increased nearly 2% to $4.5 billion, according to DefiLlama data. Meanwhile, the aggregate surplus buffer meant to stabilize the coins has remained flat at approximately $50 million.
In a post on X, Sky said the proposal was part of a capital scaling strategy to build up this backstop. The protocol noted the adjustment would improve capital efficiency and support the long-term strength of its ecosystem.
The buyback program, funded by protocol revenue, had cost $116.6 million in USDS since February 2025, data shows. The tokens were purchased and distributed to stakers of SKY, the governance token, to incentivize participation in the decentralized autonomous organization.
Last year, S&P Global gave Sky a B- credit rating, comparable to certain government bonds, partly due to its low surplus buffer. The agency wrote that capital and earnings were a material weakness for the protocol.
Christensen has outlined other mechanisms to ensure stablecoin stability, including issuing new SKY tokens. The protocol could also claw back about $25 million in crypto from subsidiaries if needed.
