PANews reported on May 1 that according to The Block, Sky's core governance design team Atlas Axis submitted a proposal that, if approved, will complete the upgrade of the protocol from MKR to SKY. The shift will make SKY the exclusive governance token and enable the staking function to unlock USDS rewards for SKY holders. Sky co-founder Rune Christensen called it a "huge milestone" and believed that the proposal could help Sky achieve zero fixed cost transformation by the end of 2025. If the proposal is approved or activated within a few weeks, SKY will inherit MKR governance voting rights. Existing MKR holders can upgrade to SKY at a fixed exchange rate of 1:24,000, and can also vote on governance proposals or delegate to others. Starting September 18, MKR to SKY will face a 1% penalty, and thereafter increase by 1% every three months. Initially, the SKY pledge vault will disable the liquidation function, which will be restored later. Governance rights will be moved to the new contract, and the transition will be completed from May 15 to 19 (depending on on-chain voting).