Author: Jae, PANews
While DeFi lending leader Aave is embroiled in the Kelp DAO hack, another established protocol, Sky, has not only attracted significant investment from whales, with its TVL surging over 25% in the past two weeks, but has also capitalized on this momentum by launching two major initiatives, aiming to pave the way for its institutionalization strategy through governance reforms:
Domestically, the agreement proposes to simplify the treasury management mechanism, shifting the expenditure model from subjective governance voting to rigid rule constraints;
Externally, it is building Laniaakea, an institutional-grade on-chain capital allocation infrastructure, in an attempt to capture the liquidity of 300 billion idle stablecoins.
Sky is accelerating its efforts to secure a niche in the DeFi new infrastructure ecosystem.
From "rule by man" in communities to "rule of law" based on rules
On April 25, Sky founder Rune Christensen posted on the governance forum that the transfer of assets from Genesis Capital to Grove has been completed, and the Genesis protocol's genesis phase has officially ended.
In its genesis phase, Sky adopted a human-driven decision-making approach: community voting determined expenditures and funds were allocated discretionarily, providing sufficient flexibility for the early expansion of the ecosystem. However, as the asset size exceeded tens of billions of dollars, the resulting uncertainty and high governance costs gradually evolved into a constraint on protocol credit.
The most direct signal is that S&P Global has assigned Sky a B- credit rating. S&P Global has directly pointed out Sky's weaknesses: uncontrollable governance risks and opaque capital positions.
For a protocol that carries the credit of tens of billions of dollars in stablecoins, governance uncertainty is itself a significant systemic risk.
Sky's proposed solution is to streamline and restructure the Treasury Management Function (TMF). The protocol reduces the complex 5-step waterfall structure to a 4-step fixed framework.
The most important constraint is the agreement's hard cap on operating expenses. Sky shifted from rule by man to rule by law, putting the power of the treasury into the cage of code.
In the old system, the community's discretionary power over Step 1 was capped at 21% during the Genesis phase, while Post-Genesis was originally planned to be set within the range of 4-10%.
However, if the percentage is floating, then each adjustment requires a complex governance vote.
Therefore, the new proposal directly overturns the entire old system, permanently locking the spending ratio at 20%. This means that governance friction will be significantly reduced, and at least 80% of the protocol's net revenue will remain within the system for reserve accumulation, token burning, or distribution to holders.
For SKY holders and ecosystem partners, a fixed spending percentage is more predictable than highly uncertain governance decisions. A 20% fixed spending percentage makes the treasury's cash flow more transparent and harder to manipulate through governance.
It can be said that although Sky has voluntarily reduced its governance authority, it has also offered a pledge of allegiance in the form of "certainty".
Building an institutional-grade on-chain capital operating system
While amending the constitution domestically, Sky is also opening its doors to the outside world.
On April 28, Sky announced that it is building Laniakea, a standardized infrastructure framework for institutional-grade capital deployment, for its Sky Agent Network, which aims to address the issue of more than $300 billion in idle funds in the stablecoin market.
It's important to note that this "Agent" is not the same as the "Agent" in the traditional sense. "Sky Agent" refers to a Capital Agent, not the AI Agent as commonly understood.
The Sky team believes that the main reason why institutional funds have been hesitant to enter the market for so long is the lack of five key elements: shared infrastructure, standardized smart contracts, risk assessment, data systems, and legal framework.
Laniakea, on the other hand, attempts to bridge the gap at the infrastructure level through standardization in four dimensions:
- Standardization of smart contracts: Template-based deployment saves organizations the cost of reinventing the wheel;
- Standardization of risk governance: Unifying risk measurement standards and sharing losses in sequence;
- Data infrastructure standardization: Protocol encoding will be stored in a machine-readable format to support AI-powered real-time risk control;
- Legal compliance standardization: providing a pluggable identity and KYC registration system, a legal framework shared across product lines, and an accountability mechanism for collateral support at each operational level.
Under the Laniaakea framework, Sky will no longer be a "lender," but a network platform for capital agents.
- Primes: also known as Sky Agents, are similar to on-chain fund managers who compete for capital allocation quotas and develop investment strategies according to Laniakea's unified standards. Examples include Spark, which is responsible for DeFi lending, and Grove, which is responsible for private lending and RWA.
- Halos: Primes' specific financial products, incubated on the Laniaakea shared infrastructure, cover a variety of revenue streams, from government bonds (RWA) to private lending.
This layered architecture allows Sky to integrate the expertise of different agents for diversified asset allocation while maintaining a unified framework, thereby significantly improving the scalability of the ecosystem.
In other words, based on Laniakera, Sky's role will shift from a "direct operator" to a standardized on-chain operating system designed for institutional capital.
PANews believes that the agreement's main revenue will come from stability fees, interest rate spreads, and taxes.
Stability fees are Sky's most traditional and stable way of generating revenue. Whenever Halos, managed by Primes, wants to be used as collateral to mint USDS on Sky, it needs to pay interest to Sky, which is the stability fee. Laniakea lowers the barrier to institutional access, meaning more institutional assets will enter the system. As the total amount of USDS minted increases, the total amount of stability fees earned by the protocol will also increase.
Primes, as a professional asset manager, is responsible for bringing yield strategies to Sky. The protocol will provide liquidity to assets through USDS at a lower cost. Sky earns the net spread between the strategy yield and the cost of USDS funding (such as deposit rates). Laniakea's standardization allows Sky to manage hundreds of spread channels simultaneously, achieving economies of scale.
Each individual Prime is essentially a "franchise" of Sky. Generally, Prime issues its own tokens and is required to pay a certain percentage of these tokens or a portion of its business revenue to Sky. Even if the protocol is not directly involved in issuing a particular product segment, as long as Prime is a Halos issued based on Laniakera, Sky can generate revenue by collecting taxes.
It is worth mentioning that, since the agreement status is machine-readable, AI will take on functions such as capital allocation and liquidation management.
By accessing Laniakea's standardized data interface, AI can achieve real-time monitoring of cross-asset exposure, collateral quality, and liquidity depth. When a risk signal such as abnormal interest rate differentials appears in an underlying collateral, AI can automatically adjust the corresponding Halos credit limit or liquidation threshold according to preset "machine rules," providing institutions with algorithmic capital security protection.
Furthermore, machine readability allows Halos to become a "standardized Lego" that can be optimized by AI models. AI can automatically switch capital allocations between different risk levels based on market interest rates and volatility to find the optimal Sharpe ratio.
Overall, Laniakea's AI compatibility will empower institutional capital or Primes in terms of risk management and investment decision-making.
Positioning itself at the infrastructure level, but the transformation harbors three hidden concerns.
Sky's two actions are not separate but rather a combined strategy. The rule-based treasury management mechanism provides governance certainty for institutional capital, while Laniakea provides technological certainty.
Sky's actions also reflect a logical shift taking place in the entire DeFi market: from competition at the application layer that is "front-end-heavy" to competition at the infrastructure layer that is "back-end-heavy".
The development path of DeFi lending protocols is evolving from single liquidity pools to layered architectures. The launch of Laniakea is essentially Sky's attempt to secure its niche in the infrastructure layer. Once Laniakea becomes the preferred entry point for 300 billion idle stablecoins, Sky will also upgrade to a central node for on-chain capital allocation.
It is worth noting that Sky's transformation is by no means without risk:
- The second game of governance power: Although the rules will lock in the spending ratio, the power to modify the "rules themselves" still rests with the governance vote. If a governance attack occurs, the long-term effectiveness of the rules may be questioned.
- Increased technical complexity: Building machine-readable infrastructure that supports real-time AI monitoring is highly challenging. Any vulnerability can be amplified in large-scale deployments;
- Agent-related risks: Primes holds significant capital allocation power. Although it has a loss accountability mechanism, under special circumstances, the distribution of benefits between the agent and the agreement may still face both legal and technical challenges.
From a stablecoin issuer to building Laniaakea, an on-chain capital hub, Sky is about to complete a transformation from a single DeFi protocol to an institutional-grade operating system.
As institutional capital flows in through standardized interfaces, Sky will embark on a new journey.
