Editor’s note: The author believes that $MKR (now $SKY) is expected to perform well in the first/second quarter of 2025, mainly due to the monthly $30 million buyback plan, the close to all-time high supply of DAI/USDS, and the rise momentum brought by the upcoming SPK farming. Despite the lack of market favor for the rebranding, its fundamentals are strong, coupled with the potential Favourable Information of the US Stable Coin Act, the outlook is positive for the coming months.

The following is the original content (slightly edited for readability):

In this article, I will explain why $MKR is expected to outperform most cryptocurrencies in the first/second quarter of 2025 after risk adjustments.

Reasons for the rise of MKR are as follows:

• The $30 million monthly buyback program has been launched

Despite the low sentiment, the supply of DAI/USDS is close to its historical high.

· SPK farming is about to start (money printing machine)

Note: MKR has been rebranded as $SKY, so they are actually the same generation of coin. DAI has also been rebranded as USDS.

Buyback is back

Yes, the repurchase has come back. This time at an accelerated pace.

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After the proposal executed on February 24th, an additional 55 million USDS has been earmarked for repurchase. The repurchase will be conducted at a rate of 30 million US dollars per month, or approximately 1 million US dollars per day.

In fact, this repurchase may be more because the protocol itself is profitable (with annual net income of 125 million US dollars, that is, 10.42 million US dollars per month), as shown below.

Given that the current price of $MKR is $1600, a buy pressure of $30 million will mean that the protocol will buy back approximately 1.9% of the total supply. For comparison, @MicroStrategy has purchased 2% of the bitcoin supply over the past 4.5 years. I don’t think this buy pressure and its speed have been priced in by the market yet.

We attribute the poor performance of MKR in 2024 to rebranding, which was not well received by the market. However, USDS has actually been rising, dropping to as low as 45 billion USD at one point. “Low sentiment, strong fundamentals” provides a good narrative opportunity for a light position coin to grow (some may call it a hated rebound).

SPK Coin Listed

Spark, a lending market and asset management platform with a TVL of $3 billion, spun out from MakerDAO. This article suggests that SPK farming and TGE will take place shortly, which will provide more support for buyback firepower.

SPK will be a ‘fair launch/farm’ coin, and you can only farm by staking USDS or SKY (check out the economic details). This means that the demand for staking USDS/SKY for farming may rise, thereby increasing the supply, income, and profits of Stable Coin and other indicators.

50% of $SPK incentives will be distributed in the first two years. Assuming its fully diluted valuation (FDV) is $1 billion, $500 million of value will be allocated to SKY/USDS stakers, providing staking rewards for the native coin and subsidizing the rise of USDS, thereby driving more repurchases in the future.

Other SubDAOs/Stars (such as Solana Star, RWA Star, etc.) will also be launched successively, which will further promote future repurchases.

Stable Coin Legislation

For those who have not been paying attention to the regulatory developments in the United States, the Stable Coin Act, the “U.S. Stable Coin Guidance and National Innovation Establishment Act” (GENIUS), aims to establish a federal framework for the issuance and regulation of stable coins in the United States.

It is currently unclear which players will benefit from this bill (aside from Circle), but if we see the GENIUS bill forming a stronger narrative and triggering more headlines, we believe MKR may steadily become one of the liquidity traders in the stablecoin-related projects, providing exposure to this narrative. Although weaker than other catalysts, it represents another reason why market participants may be willing to increase their MKR positions; it is not difficult to see that the demand side of this coin may be gradually accumulating, rise in Favourable Information.

Conclusion

Although the rebranding of Sky has been somewhat unsuccessful, this may already be reflected in the price (downward trend from April 2024 to February 2025). Looking ahead, based on the reasons outlined in this article, we have every reason to believe that the next few months will be positive for MKR. Finally, although the sample size is small, we often see MKR perform well in uncertain or volatile market conditions, which is most likely in the foreseeable future.

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