Sky Slashes Buybacks 87% to Stockpile Stablecoins Ahead of ‘Massive Oil Shock’

TL;DR

• Sky cut daily buybacks from $300,000 to $37,600 for three months, an 87% reduction aimed at strengthening reserves behind USDS and DAI.
• USDS grew above $7.9 billion over the past 30 days and DAI reached $4.5 billion, while aggregate backstop capital stayed flat near $50 million.
• Sky has spent $116.6 million on buybacks since February 2025, and Rune Christensen says oil-shock risks justify prioritizing reserve capacity over token support now.

Sky has abruptly pulled back one of DeFi’s most aggressive token-support programs, and the timing suggests the protocol is preparing for stress rather than celebrating strength. The digital cooperative behind Sky voted Thursday to slash its daily buyback program from $300,000 to $37,600, an 87% cut that will remain in place for three months. The stated goal is to reinforce reserves behind its stablecoin system just as founder Rune Christensen warns that war in Iran could trigger a “massive oil shock” and break financial infrastructure. The move shifted attention from token incentives to balance-sheet protection.

Reserve concerns had been building before the vote

Behind the decision sits a growing mismatch between the rapid expansion of Sky’s stablecoins and the flat capital buffer meant to defend them. Over the last 30 days, USDS supply rose more than 22% to about $7.9 billion, while DAI increased almost 2% to roughly $4.5 billion. Yet the protocol’s aggregate backstop capital, the surplus crypto designed to stabilize the stablecoins if they become undercapitalized, has stayed near $50 million. That imbalance sharpened criticism that Sky had been spending too freely on buybacks while the reserves supporting USDS and DAI failed to scale alongside demand.

That criticism was not new, because Sky’s buyback strategy had become expensive long before the latest geopolitical warning. Since February 2025, the protocol has used $300,000 in USDS each day to buy SKY, its governance token, and then distribute those tokens to SKY stakers. According to data cited in the source article, those purchases have consumed $116.6 million in USDS. Supporters of the reduction argue that pausing buybacks will help rebuild the surplus buffer. Critics counter that the adjustment looks less like proactive risk management and more like a delayed response to deteriorating balance-sheet discipline.

What now matters is whether Sky can convince users that reserve strength matters more than keeping its governance token supported. The protocol says the change is part of a broader capital-scaling strategy and argues that even if reserves came under pressure, other mechanisms could help maintain the stablecoins’ pegs. Christensen has pointed to options including issuing new SKY tokens and clawing back crypto used to capitalize subsidiaries such as Spark, with about $25 million potentially recoverable. Even so, the vote lands as an admission that buyback optics are no substitute for hard real reserve capacity.