# A Sky contributor proposed halving the Step 2 backstop allocation on October 28.

> The contributor proposed directing more capital to USDS staking rewards, SKY staker buybacks and token burning.

- URL: https://riadefi.com/on-chain/2026-10-28-sky-backstop-allocation-proposal/
- Type: Governance
- Stage: Proposed
- Evidence: confirmed
- Materiality: watch
- Event date: 2026-10-28
- Version: 1, published 2026-10-31 (first published 2026-10-31)
- Follow-up: 2026-11-04
- Advisor-relevant: no
- Affects: Sky (protocol)

## What happened

Sky contributor misher proposed reducing the Step 2 allocation to Aggregate Backstop Capital from 50% to 25% on October 28, 2026.

## What changed

The contributor proposed directing more capital to USDS staking rewards, SKY staker buybacks and token burning.

## What did not change

The contributor submitted a discussion proposal. The cited discussion establishes no governance approval or executed distribution.

## Confirmed

- The contributor illustrated retained capital falling from 5,854,378.80 USDS to 2,927,189.40 USDS.
- The contributor illustrated USDS staking rewards rising from 2,634,470.46 USDS to 3,951,705.69 USDS.
- The contributor proposed extending the stated backstop funding period from 1 year to 2 years.

## Still open

- Sky governance has yet to establish whether it will consider or approve these changes.
- The contributor’s projected staking yields and backstop funding periods require independent confirmation.

## What it means for an advisor

- Ketju should track governance action before revising the Sky memo’s explanation of backstop accumulation and USDS rewards.
- Advisors should treat the contributor’s projected rewards as proposed economics.

## Sources

1. [Reduce ABC Step 2 to 25%, increase Staking emissions 50%](https://forum.skyeco.com/t/reduce-abc-step-2-to-25-increase-staking-emissions-50/28361) · misher, Sky governance contributor · 2026-10-28


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Published by Ketju Research on RIADeFi (https://riadefi.com). Educational research for financial professionals; not investment, legal, tax, or compliance advice.