Sky Tokenomics
We’re excited to release the Sky Protocol tokenomics. The SKY token is the governance and utility token of Sky Protocol, a Cardano L2 focused on data availability.
This document provides an explanation of the Sky Protocol and its token, SKY.
Table of Contents
1. Introduction
2. SKY Utility
3. SKY Tokenomics
4. Team
5. Conclusion
1. Introduction
Sky protocol is an open source Cardano L2 focused on data availability.
With Sky Protocol, Cardano dapps will be able to use our modular framework to choose the features most important for their respective dapp, such as affordability, transaction speed, privacy, interoperability, and more. This ensures that dapps always have access to the best features available leading to new levels of efficiency and scaling on Cardano.
There are 3 main projects that are addressing similar issues, namely Celestia, Avail, and EigenLayer, all of which have been very successful in their own regard. We, however, not only see ways to improve their model, but also see that building this with a focus on Cardano can be beneficial to the ecosystem.
Thus far, we’ve conducted Twitter Spaces, interviews, released our technical overview, and announced some collaborations with with Blink Labs, zkFold, and DexHunter.
As we continue developing our protocol, today we take a look at our tokenomics.
2. SKY Token Utility
There are 4 key components of utility for $SKY.
- Transaction Fees
- Staking
- Governance
- Network Operation
Transaction Fees
The SKY token is used as a utility token in the payment of fees for publication of data to be made available on the network. Chain operators and committee members are welcome to agree on actual payment happenings in whichever token they prefer, and we will provide tools to help with that. For the purpose of a fair accounting of fees, a common on-chain unit of accounting is required, and the SKY token is used for this.
Staking
The SKY token can be staked to partake in the Proof-of-Stake economic validation network and security.
SKY stakers may either become SKY validators themselves, or delegate their stake to others acting as SKY validators who will operate the network in their name.
Validators who do fulfill their obligations, on the other hand, receive a reward made of part of the fees paid to the network by the users who post data, plus an additional incentive from the SKY treasury.
SKY stakers may evaluate which of the many SKY validators they will delegate based on their reputation, the quality of their service, the uptime of their servers, and the way they share the rewards they earn with their stakers. SKY validators who attract larger total stakes will be selected more often and attract more fees while recovering their fixed operating costs faster. A healthy market for SKY validators will be an essential feature to ensure the network remains decentralized as it grows and matures.
Governance
Everyday votes are used to set and tune the parameters that drive the scaling of the network based on supply and demand.
Additionally, SKY stakers are used to vote on governance decisions that drive the network and its protocol at large, such as electing a board of directors, providing of grants to ecosystem projects, and electing token emissions for SKY validators.
Network Operation: Data Availability & Network Management
Topic committees (think watchers) provide the service that the Data Availability network is designed to provide, namely accept data from side-chain operators and make it available to watchers.
Topic committees also accept fee payment in SKY tokens, survey the honest behavior of previous committees based on which they will be rewarded or punished, and otherwise publish metadata about operations.
Hierarchical consensus committees gather the updates from topic committee metadata into a common ledger. The top consensus committee also manages the stakes based on which all the committees will be pseudo-randomly selected, and the various votes.
3. SKY Tokenomics
There is a finite total of 100 million (100,000,000) SKY tokens in existence. In total, 83% of tokens are allocated for public distribution, while 17% of tokens are allocated for the team.
Below summarizes the proposed allocations:
Public Sale: 25% (25,000,000)
DAO Treasury and Liquidity: 55% (55,000,000)
Team and Advisors: 17% (17,000,000)
Airdrop: 3% (3,000,000)
Public Sale
We allocated a substantial portion of tokens to our upcoming public sale. Our goal is to make this token sale beneficial to those who are supporting us. Full details will be released in the coming days.
DAO Treasury and Liquidity
DAO Treasury is tasked with growing and maintaining the network and its community over time: keeping the technology updated, competitive and documented; providing suitable incentives for people to build, run, and use the network through grants or future sales. SKY token holders will vote to allocate funds from the Treasury. This will also partially be used to kickstart the ADA/SKY pool. We estimate 5% will be allocated to liquidity, depending on the outcome of the token sale. The exact details of this will be announced in the coming days with the presale information.
Team and Advisors
This allocation is reserved for the founding team members and advisors. The vesting schedule for this allocation can be found below.
Airdrop
3% of tokens are allocated for airdrops. This will be a combination of Twitter followers, active Discord members, community supporters, and more.
3.1 Vesting Schedule and Emissions
Tokens allocated to team members and advisors are subject to a vesting schedule. During the vesting period the unvested tokens may not be sold, however voting rights over the fully vested number of tokens will remain in effect unless vesting is interrupted. No team tokens will be unvested until 6 months after the token sale. The team vesting period runs over a year from the end date of the initial pre-sale, presumably January 9th, 2025 to January 9th, 2026. During this period, 1/12 of the tokens will be released from vesting each month so long as the team remains in place, similar to the tokenomics model of Butane, which has displayed strong tokenomics thus far.
For emissions, we expect initial circulating supply to be around 30–40%, including the public sale allocation and provided liquidity. From there, the 3% airdrop allocation will be completed within 3 months following mainnet deployment and the emissions of the DAO treasury will be decided via governance vote.
4. Team
Sky Protocol is founded by François-René Rideau, who has previously worked with IOHK and has more than 25 years of experience building programming languages and distributed systems. François was previously a Senior Developer for companies such as ITA, Google and Bridgewater Associates.
For more information on the rest of the team and the technical architecture of our protocol, see our whitepaper here.
5. Conclusion
Thank you to our community for your support thus far. We are looking forward to the SKY token sale and we will announce the full details in the coming days.
We are excited for the continued development of Sky as we believe it has the potential to be catalyst for unparalleled ecosystem growth and scalability.
More information on Sky can be found below:
Disclaimer
Participation in the SKY Protocol network and acquisition or use of the SKY token should be based on a good understanding of its utility and knowledge that there is always the risk of loss involved in acquiring tokens whose utility has not yet been tested. There is no expectation of any financial return whatsoever and interested parties should consult with blockchain, financial and legal advisors in the countries in which they live or operate before engaging in any token related acquisition or sale activities.
