The Big Whale: You've been in the news a lot in recent weeks. Perhaps we should start by looking back at the major changes that have affected Maker, which has now become... Sky?
Rune Christensen: Absolutely. Maker has evolved into Sky, but beyond the rebranding - and we'll come back to that - the most important thing is the path we are charting. The aim is to make Sky the best possible platform for accessing returns from both decentralised and centralised finance.
We're going to do this through a new stablecoin, the USDS, which will be accessible either via DAI (Maker's historic stablecoin) or by converting USDCs and USDTs.
What's really new about your system?
Sky is bringing several things new.
First there are Sky token rewards: users can earn Sky tokens by holding USDS, which is a great incentive for DeFi veterans and new users alike.
Then Sky provides access to a wider ecosystem than Maker with DAI. Thanks to the USDS, users will be able to choose rewards from projects that will be joining us gradually. There's already Chronicle and Spark.
How did you develop Sky?
Sky is built on the Maker protocol, which has been around for seven years and has become a leader in the world of decentralised finance. What's interesting about Sky today is that we're opening up this infrastructure. Other projects can join us.
The other very interesting point about Sky is the system of 'stars', formerly known as subDAOs. The first star, Spark, will launch its token in a few months, adding even more reward options in Sky.
A month after the rebrand, you're proposing a potential return to the original branding. What motivated this decision, and how should we interpret it?
It’s important to remember that the rebrand was just one part of what was introduced a month ago… USDS, Native Token Rewards, and Stars were also introduced. Since going live, USDS exceeded 1 billion total supply just 2 weeks after its launch. This is a major deal - the most important metric of the entire project is the demand and growth of USDS. Most of that USDS demand comes from new users. Total inflows to the system across USDS and Dai have increased by about 700 million since the launch of USDS.
The series of proposals that will be introduced will provide several options to the community for leveraging the strong momentum built by the USDS launch and moving the brand forward.
The baseline option is to keep Sky as it is, keeping the strategy of migrating to Sky. The two other options are ways of recentering the Maker brand. The first option is to return the Maker brand and make it central once again as it was in the past. The second option is to reintroduce the Maker brand but with a light brand refresh, aiming to better align the Maker brand with its products DAI and USDS.
When do you think Sky - or perhaps soon to be Maker again - will have attracted dozens, if not hundreds of new projects?
It's difficult to give an exact timeline. It depends on a number of unpredictable factors, such as advances in technology and governance issues.
However, we will reach certain key milestones fairly quickly, such as the integration of the first stars. All star tokens, like Spark, will be available as rewards for holding USDS.
And in terms of adoption, what is your strategy to attract more users?
Our approach is pretty simple: we offer the most reliable, transparent and profitable decentralised stablecoin (USDS) on the market. But that's not enough to convince everyone, because even after more than 10 years, people are still reluctant to invest in bitcoin...
That's why we decided to open up the Maker universe and create Sky, which will provide access to more protocols via USDS and therefore potentially more returns.
Let's talk about returns. The majority of DAI yields, and therefore USDS yields, come from the reserve, which is partly made up of US Treasuries. With interest rates and therefore bond yields falling, how are you going to maintain an attractive yield?
Historically, Maker was very dependent on interest rates from traditional finance (TradFi). This was clearly our main source of income.
But with Sky, we have designed a system capable of capturing the interests of both traditional finance and decentralised finance.
If interest rates are high, the returns generated by the collateral backing the USDS increase. When rates fall, other opportunities need to be found. This is where decentralised finance becomes interesting.
Sky currently generates around $80 million a year by holding several billion dollars' worth of Treasury bills. If bond yields fall, we'll turn more to decentralised finance. This is how we are able to offer a return of 6.25% on the USDS.
Beyond returns, the main issue for a stablecoin is that of its capitalisation. Today, DAI is around $5 billion, while Circle's USDC is over $30 billion, and Tether's USDT has passed the $100 billion mark. How can we compete?
Maker has always been at the forefront of innovation, and with Sky we're taking it even further. The advantage of Sky's star system is that protocols like Spark can develop products in DeFi without going through Maker's DAO, which benefits the Sky ecosystem.
One of our ideas for increasing capitalisation is to attract new tokenised assets. In particular, we have launched a "tokenisation competition". Dozens of issuers have applied to tokenise their products on Maker. In total, Spark has earmarked $1 billion for tokenisation projects.
What's the point of this kind of competition?
This competition pushes everyone to improve, including bank-led projects. Everyone optimises their offerings in terms of cost, liquidity, security and transparency.
With regard to the USDS, why did you introduce this 'freeze' function for the USDS? What is its purpose?
In reality, it is not a "freeze" function but an "improvement" function that has been put in place. This was approved by governance a few months ago. Enhanceability allows Sky's decentralised governance to modify the USDS token if necessary.
The DAI, on the other hand, is immutable. It cannot be modified or frozen, which is important for those who value this immutability.
With USDS, we are targeting a consumer market. This 'improvability' offers flexibility and allows us to be compatible with regulations if they change.
Don't you think that by doing this you risk losing some of your early adopters?
I don't think so. Those who prefer the DAI can continue to use it. DAI remains unchanged and immutable.
With Sky, we're aiming for mass adoption, and to do that, we need to offer better rewards and ensure scalability of the product.
The ability to interact with real-world assets is crucial for large-scale decentralised stablecoin. And yes, it is important to be aligned with regulation to protect these assets. However, all decisions related to these changes are controlled by decentralised governance.
You have also launched a "Pure DAI". Can you tell us more about this stablecoin?
The Pure DAI is essentially DAI, but only backed by decentralised reserves, such as ETH and ETH staké. There will be no real-world assets.
Pure DAI is a niche product for those who want to avoid any interaction with the traditional financial system.
What do you think of projects like Usual that offer returns to their users? Do you see them as competitors?
It's a good thing that this kind of project exists. The redistribution of returns is a real subject, and Sky is the most interesting environment today. Note that we don't take any margin on returns. Everything is passed on directly to the user. Our strength is that we know how to generate returns in both TradFi and DeFi.
How do you make money if you redistribute all the returns?
We create value through the Sky governance token and by integrating new DeFi projects into Sky.
Do you think centralised stablecoins like the USDC or the USDT will end up redistributing yield?
It's unlikely that centralised stablecoins could offer returns comparable to Sky's. But even if they did, we would still have an advantage because we rely on TradFi and DeFi.
Beyond returns, Sky creates value for the user through its ecosystems like Chronicle or Spark. Yet these ecosystems can only exist in a decentralised universe.
Stripe has just put up $1.1 billion to acquire Bridge, which is a start-up specialising in stablecoin payments. Is this a turning point?
Stablecoins are a more efficient and cheaper means of payment. It's clear that the sector will grow and that this type of transaction will multiply.
The MiCA regulation has just come into force in the European Union. It will be binding from 30 December. What stage have you reached in your discussions with the regulator?
We are in discussions with the regulators, particularly in Europe. MiCA represents a significant step forward for the industry, and we are closely engaged to ensure that Sky, Spark and all associated protocols remain compliant while continuing to innovate.
The main objective for decentralised projects like Sky is to ensure that the regulator makes a clear distinction between decentralised blockchain technology, such as DeFi, and centralised products.
The two should be regulated differently, and so far the European Union has understood this. In fact, that's why decentralised stablecoins are not affected.
If you try to regulate a decentralised protocol as if it were centralised, you'll end up banning it. Decentralised protocols simply don't have the ability to comply with certain regulations - it's just computer code running on thousands of computers, not a company or a person that can follow rules.
Is there a risk that USDS and more broadly Sky could one day be banned in Europe?
Sky is a protocol that runs on the Ethereum blockchain. You can't ask a piece of code to follow rules like you would a company. This is the very essence of decentralised technology. At the moment, decentralised protocols are not required to comply with MiCA, that's all I can say.
Whatever happens, I have to admit I'm a little worried about what's happening in the EU. We undoubtedly have some of the best projects, but it's not necessarily the most interesting place to develop them. And I say that as a European.
Paradoxically, I think that the United States, which has been very strict over the last 18 months, will end up adopting a more consensual approach to DeFi because they will want to take advantage of it.
