Sky Protocol to Cut Treasury Waterfall After Genesis Transfer

Rune Christensen, founder of Sky Protocol, published a proposal on the project’s governance forum on April 24 to simplify the protocol’s Treasury Management Function after the final Genesis Capital transfer to Grove.

The plan would collapse the current five-step revenue waterfall into four by eliminating the Fortification Conserver allocation and redistributing its share at fixed rates across the remaining categories.

Under current rules, net protocol revenue flows in this order: Security and Maintenance; Aggregate Backstop Capital; Fortification Conserver; Smart Burn Engine, which funds SKY token buybacks; and staking rewards for SKY and USDS holders. The proposal would remove the Fortification Conserver step and fold its allocation into the other buckets.

The proposal also calls for retiring several legacy mechanisms, including the Net Revenue Ratio, phase-based distinctions between Genesis and post-Genesis spending rules, activity-based staking reward tiers and Short Term Trading provisions.

Genesis Capital was the mechanism Sky used to seed new agents with USDS so they could begin deploying capital. Sky’s official account posted on April 8 that the final transfer sent roughly 20.8 million USDS to Grove. Grove’s total allocation was about 25 million USDS before reductions for roughly 3.6 million USDS in pre-token-generation-event expenses and a token launch penalty near 565,000 USDS.

Grove reported crossing $3 billion in total value locked on April 6.

Current treasury rules require at least 79% of net revenue to remain within the protocol at all times. During the Genesis phase the Security and Maintenance allocation can reach 21% of net revenue; after Genesis governance may set that allocation between 4% and 10%.

Christensen’s proposal would remove several phase-based distinctions and streamline how governance sets allocations under the simplified four-step framework.

Protocol data show USDS circulating supply near $11 billion, placing it third by stablecoin market capitalization. Market data show the SKY token trading around $0.089 with an approximate $2 billion market capitalization.

Earlier in 2026, Sky governance authorized up to $2.5 billion for deployment through the stablecoin incubator Obex, and in April the protocol launched native USDS on Avalanche via the SkyLink bridge. In March, governance proposed roughly 70 million USDS in Genesis Capital allocations for remaining launch-phase agents, including 25 million USDS each for Amatsu and Ozone, 10 million for Keel and 10.5 million for Launch Agent 6.

The proposal is now open for governance consideration on Sky’s forum, where token holders and agent representatives can debate whether to adopt the streamlined Treasury Management Function and retire the legacy mechanisms that governed the protocol during its founding phase.