The sky stone was a small stone which fell from outer space, landing in a pea patch on the Martingale residence. The stone was a chunk of Green Kryptonite that had mushroom spores on it, this caused a large crop of mushrooms to start growing on Paw Martingale's farm.
Marvin White and Wendy Harris eventually acquire the sky stone when they were told by the Martingale family that the Raven was after it. Because of this, they asked if they could have it, because it could help them in their case, since they were searching for the Raven.
However after bringing the the sky stone to the Hall of Justice to show the Superfriends, they learn that its' actually Kryptonite when Superman begins to get weaker. After several more building thefts Superman decides to give Raven the sky stone in exchange for the buildings he had stolen.
Later on however, the Raven is forced to give up the sky stone when he is in need of being saved by Superman, so he tosses the stone off of his flying island and Superman's strength is able to return, allowing him to save his island which was falling.