Anyone still holding MKR receives 23,040 SKY per MKR on conversion today, rather than the full 24,000. The conversion contract withholds four percent. That deduction rises by another percentage point every three months, and the fourth step took effect on June 8, 2026. Eighty-six days have passed since then. The three intervals between steps so far ran to 84, 89 and 85 days. The fifth step is therefore due, it can take hold within days, and it costs a further 240 SKY per MKR.
These figures come from no press release. cryptoticker.io read the conversion contract on the Ethereum blockchain directly on September 2, 2026, and reconstructed the entire history of the penalty block by block. The result diverges on one decisive point from what current reporting says: the steps do not fall on the calendar dates you would expect.
The conversion ratio is fixed: one MKR yields 24,000 SKY. Nothing has changed there since the conversion opened, and the penalty does not change it either. The deduction applies one stage later, at payout: the contract withholds a percentage of the converted amount before it transfers the SKY to you.
At the four percent currently in force, the arithmetic looks like this. One MKR notionally becomes 24,000 SKY, of which the contract keeps 960 SKY, leaving 23,040 SKY to reach you. Anyone converting ten MKR gives up 9,600 SKY along the way. If the penalty rises to five percent, only 22,800 SKY per MKR arrive, and the difference against today is 240 SKY per MKR.
That is the whole mechanism. Unspectacular, with no announcement to your wallet, and that is precisely where the problem lies: there is no letter, no email and no warning in any app when the next step takes hold. From the moment of the change, the contract simply calculates differently.
A governance token is a token that lets its holder vote on the rules of a protocol, much like a voting right. MKR was that token for the lending protocol long known as MakerDAO. In May 2025 the protocol changed its name to Sky and swapped out the governance token in the process: SKY replaces MKR.
The conversion runs through what is known as a one-way contract. This is a program on the blockchain that accepts MKR and issues SKY, but does not work in the opposite direction. Once you have converted, there is no way back. That one-way street is deliberate, because the protocol wants MKR out of circulation entirely.
The Delayed Upgrade Penalty is the lever meant to speed that up. The deduction targets waiting as such, not individual holders. Convert early and you pay nothing. Wait, and you pay more with every quarter.
The conversion contract carries two values that anyone can query publicly. One is the conversion ratio, the other the current penalty. On September 2, 2026 at 03:51 UTC, in block 25,887,030, the contract returned a ratio of 24,000 and a penalty of exactly four percent. A second reading twelve minutes later, shortly before this analysis closed, produced the same value.
For now that is only a confirmation. The value becomes interesting in retrospect, and for that the contract can also be queried at any earlier point in time. That is exactly what we did.
We pinned down the moment of each individual increase by querying the penalty value at ever tighter block heights until the exact block in which it changed was established. The result:
Two observations follow that a holder can put to practical use. First, the steps always take hold in the early afternoon UTC, within a narrow window between 14:00 and 14:41. That fits the way changes take effect at this protocol: through a program executed at a set time after a vote. Second, not one of the four increases falls on a round calendar date.
The protocol documentation names September 18, 2025 as the start date of the penalty and states that it then rises by a further percentage point every three months. Take that literally and the fifth step lands on September 18, 2026. That calculation is precisely the one doing the rounds in current coverage.
Our measurement shows that implementation ran differently. The first step took hold not on the 18th but on September 22, 2025, four days after the announced date. The increases that followed came at intervals of 84, 89 and 85 days, an average of roughly 86 days and thus consistently a little earlier than three full calendar months.
Project those measured intervals forward from the fourth step on June 8, 2026, and the fifth falls in a window running from August 31 to September 5, 2026. Take the documentation at its word and count three full months instead, and you arrive at September 8. Both readings lead to the same practical conclusion: the window is open now, it is narrow, and it closes next week at the latest.
On the morning of September 2 the penalty still stood at four percent. That is a measurement, not a promise for the rest of the day. Anyone who wants the conversion at the cheaper rate has hours to a few days, not weeks.
Because the conversion takes the MKR delivered to it out of circulation, the total supply shows how much MKR is still outstanding at all. We queried that supply at each of the four step dates:
The curve tells a clear story. Over the first six months the penalty did what it was meant to do: half the outstanding balance disappeared. After that its effect all but ran dry. Since March, fewer than five thousand MKR have moved per quarter, and the rest sits still.
Whoever holds that residual stock either no longer responds to economic incentives or never hears about them. Both point to the same group: lost keys, forgotten wallets, estates, wound-up projects. For anyone still able to act, that is uncomfortable news, because they share the deadline with a balance that no longer stirs and that the next step will not move either.
The conversion contract keeps a record of the sum it has withheld as a penalty. On September 2, 2026 that figure stood at 36,690,446.60 SKY. Converted at the fixed ratio, that equals the value of roughly 1,528.77 MKR lost on the way through the contract.
The build-up of that sum can be traced as well. At the second step the books showed 8,211,985.06 SKY, at the third 28,600,449.48 SKY, at the fourth 31,975,308.06 SKY. The large jump falls in the quarter with the heaviest conversion volume, which was to be expected.
And the amount at stake at the next step can be quantified. Should the entire remaining balance of 85,440.87 MKR be converted only after the fifth step, the move from four to five percent alone costs an additional 20,505,809 SKY. That is not a forecast about market value but pure multiplication of two measured quantities.
The first question is not where you convert, but whether there is anything left to convert at all. Many holders are long past the conversion without ever noticing, because their trading platform carried it out automatically in September 2025.
Open your wallet or your account at the platform where you last held MKR and look at which of the two names appears there. If it says SKY, the matter is closed for you and the penalty no longer concerns you. If it still says MKR, the balance is unconverted and the clock is running.
One special case deserves attention: old hardware wallets and paper backups that have not been touched for years. Anyone who bought MKR in 2021 or 2022 and then moved the balance into self-custody will, in case of doubt, hear nothing at all about a protocol change. The blockchain does not send letters. If you own a backup like that and are not sure what is on it, this is the moment to go through it carefully; which devices and programs are suited to the job is set out in our hardware wallet comparison.
The two cases call for different steps, and confusing them costs time that is in short supply here.
Several large platforms handled the change for their customers in the autumn of 2025 and rebooked the balances automatically. Kraken describes this in a dedicated customer notice: trading in MKR was suspended on September 1, 2025 at 14:00 UTC, SKY was credited at a ratio of 1 to 24,000 on September 5, 2025, and MKR was subsequently delisted. Anyone holding MKR there had nothing to do and bore no penalty either.
Not every platform proceeded that way. If your account still shows MKR, first establish with the provider whether it offers the conversion, when it plans to carry it out, and whether it passes the penalty on to you. If you find nothing on the subject, the route left is a withdrawal to your own wallet. Which venues come into question for a later re-entry can be found in our overview of crypto exchanges.
Then the entire process is down to you, and nobody will remind you. The conversion runs through the protocol's application, which connects your wallet and triggers the rebooking. You bear the network fee for that single transaction yourself; against the penalty it barely registers on larger balances, but on very small ones it can turn the whole calculation around.
Check two things before you confirm. First, that you really are on the correct application. Around deadlines and migrations, copycat sites proliferate that offer the conversion and instead harvest the approval for your entire balance. Second, how much SKY the application displays before you confirm. If the amount deviates markedly from 23,040 SKY per MKR, abort and take a closer look.
This is where it turns awkward for German holders, and in fairness there is no settled answer to the question that this article could supply.
The framework is clear. The German Federal Ministry of Finance circular of March 6, 2025 is the binding administrative guidance for the taxation of crypto assets in Germany. Under it, exchanging one crypto asset for another counts as a disposal. Anyone who exchanges within the one-year holding period and exceeds the exemption threshold for private disposal transactions pays tax on the gain at their personal rate. After a year has elapsed, the transaction remains tax free.
For pure token migrations, tax practice argues differently: where a token is replaced one for one by a successor and the acquisition date and acquisition cost carry over to the new token, the same economic asset is held to exist and therefore no disposal has occurred. Whether that reading holds in the case of MKR to SKY is the open question.
One argument against the simple migration reading lies in the very mechanism this article is about. A pure swap at a fixed ratio would be identical for every holder. With the conversion of MKR into SKY, by contrast, the outcome depends on when you carry it out: 24,000 SKY before September 2025, 23,040 SKY today, 22,800 SKY after the next step. A transaction whose result depends on the timing of the decision looks more like a classic exchange than like a technical renaming.
That is an assessment and not legal advice. Whether your tax office treats the transaction as a disposal, whether it carries the holding period of your original MKR purchase over to the SKY, and how it classifies the withheld penalty is decided case by case. Anyone holding meaningful amounts should settle that with tax advice before the conversion, not after.
Independently of that, one recommendation applies without qualification: document the transaction before you trigger it. Date and time, the quantity of MKR delivered, the quantity of SKY credited, the difference withheld and the transaction identifier. Those five details are hard to reconstruct later, and they are the basis of any subsequent return. Tools that record such transactions automatically can be found in our comparison of tax tools and portfolio trackers.
Your MKR does not disappear. It stays in your wallet, it remains attributed to you, and the conversion contract continues to accept it. To date there is no announced end date after which the conversion would be closed.
What you lose is of two kinds. The first is the deduction, which grows by a percentage point every quarter and, according to the protocol's own description, runs on for years. The second is the token's role: MKR has already lost its function as a voting right in the protocol, which has passed to SKY. Holding MKR means holding a predecessor whose job now lies elsewhere.
A third point concerns tradability. Several platforms delisted MKR after the change. The longer the balance sits, the fewer places there are where anything can be done with it at all.
This analysis was carried out by cryptoticker.io on September 2, 2026.
The method in one sentence: we read the conversion contract and the two token contracts involved directly through two publicly accessible Ethereum endpoints, calculated the identifiers of the queried functions locally rather than setting them from memory, and determined the moment of each penalty increase down to the individual block by narrowing the block history step by step.
Scope of the review: three contract addresses, around ninety individual queries to the blockchain, four pinpointed change dates and five snapshots of total supply, all on September 2, 2026 between 03:45 and 04:10 UTC. Four endpoints were tested for suitability; two serve historical queries, two do not.
What we could not verify:
No. Nobody forces you, and your MKR remains yours. The penalty only makes waiting more expensive with every quarter.
No. The contract works in one direction. After the conversion there is no way back.
There is no basis for that. The withheld SKY are booked in the contract and are available to the protocol, not to the holder.
A hard end date would hit everyone who heard nothing about the change and would wipe out the value of their balance. The rising fee keeps the route permanently open and only makes it more expensive by degrees. That is the milder form, and for stragglers it is the better one.
Then you cannot convert either, and the penalty keeps running against that balance. A substantial share of the residual stock is likely to consist of exactly such cases; that is the obvious explanation for why so little has moved since March.
Sources for further reading: the protocol's timeline for the upgrade, including its description of the penalty and Kraken's notice on the automatic rebooking and the delisting of MKR. All figures on the level of the penalty, on the dates of the increases, on the outstanding balance and on the sum withheld come from our own measurement taken that day.
(As of September 2, 2026. This article is not investment advice. Prices and fee structures change; check the terms with the provider before you buy.)
