Rebranding of Established DeFi Protocol: Analyzing Its Major Changes and Impact

A DeFi lending protocol on Ethereum created in 2014 recently announced a major brand upgrade. This protocol has a large user base and high recognition in the cryptocurrency field, with its stablecoin currently ranking third in the market, only behind USDT and USDC, with a market capitalization of $5.36 billion.

On August 27, the protocol announced a rebranding and significant upgrades to its governance token and stablecoin. Specifically, the original governance token will be upgraded to the new governance token SKY, while the original stablecoin will be upgraded to the new stablecoin USDS (Sky Dollar).

Significant changes brought about by brand rejuvenation

Governance Token Upgrade

Each existing governance token can be exchanged for 24,000 SKY tokens. This ratio is fixed, meaning that existing token holders will receive the corresponding amount of the new governance token SKY after conversion. As of the time of writing, the price of the existing token is approximately 1913 USDT, corresponding to a post-split SKY price of 0.0797 USDT.

Stablecoin Upgrade

The original stablecoin maintains a 1:1 exchange ratio with USDS, ensuring the continuity of the stablecoin's value. Users can choose to directly exchange the original stablecoin for USDS. In addition, users can also seamlessly exchange for USDS via ETH, USDC, and USDT on the official website, with exchanges starting on September 18.

It is worth noting that the upgraded USDS will have a freezing function, which was not available in the previous stablecoins. This also means that USDS has added some centralized features on the basis of decentralization. When encountering issues such as transfer errors or theft, users can seek help from the protocol to freeze the relevant addresses.

Users can voluntarily exchange.

According to the official introduction, this token upgrade is based on a voluntary principle. Users can choose whether to convert their original tokens into new tokens. This gives community members more options. For users holding the original governance tokens, they will retain corresponding governance rights after converting to SKY. The protocol promises that the new governance model will be more efficient and transparent. In addition, the original tokens will remain in circulation unchanged, and the new tokens will coexist.

To encourage more users to participate, the team has launched a special reward mechanism: users who complete the token migration during the testing period will receive a 1.25 times reward of SKY and USDS tokens.

Sub-DAO Renaming

As part of the brand repositioning, the sub-DAO of this protocol will be renamed Sky Stars, maintaining an independent decentralized project that connects the Sky ecosystem through its unique business model and autonomy.

The first of its kind sub-DAO launched is Spark, an open-source decentralized liquidity protocol, currently providing a 6% yield for users who deposit existing stablecoins, while allowing users to borrow USDS at a 7% interest rate.

According to data from the data platform, there are currently 443 DeFi lending protocols, with a Total Value Locked (TVL) of over $31.3 billion, ranking second only to liquidity staking protocols.

Among these 443 lending protocols, Spark is currently ranked third, with a total locked value of $2.43 billion, a decrease of nearly 24% over the past month. A well-known DeFi lending protocol remains the leading DeFi lending protocol, with a total locked value of $11.15 billion, a decrease of over 16% in the past month.

Why is brand restructuring necessary?

The co-founder of the protocol stated in a recent interview that the brand overhaul is a key step in the "next evolution of DeFi." The construction of Sky Protocol focuses on simplicity and usability, allowing users to enjoy innovative features such as Sky Token Rewards (STRs) and Sky Savings Rate (SSR) in eligible jurisdictions.

First of all, with the increasingly strict regulatory environment, especially in the United States, decentralized stablecoins are facing unprecedented challenges. To address these challenges, the protocol needs to reposition itself. Rebranding can help the project gain greater flexibility in the new regulatory environment and avoid the limitations brought by its past identity.

Secondly, brand revitalization is not just about the changes in the brand, but also represents a comprehensive innovation in the underlying technological architecture. The protocol plans to enhance the overall performance of the protocol by improving smart contracts, optimizing governance mechanisms, and increasing the system's scalability. To reflect this thorough technological transformation, adopting a completely new brand image is essential.

Thirdly, to attract a broader range of users, especially those who are not very familiar with cryptocurrencies, simplifying brand recognition is crucial. The original name may seem complex and difficult to understand for outsiders, while the new brand is simpler and more memorable, which helps in the wider promotion and popularization of stablecoins.

Overall, this brand overhaul not only helps the protocol adapt to regulatory and technological changes, but also effectively expands its user base. Through this series of transformations, Sky Protocol aims to lead the next wave of innovation and development in the Decentralized Finance space.