Sky Dollar (USDS): MakerDAO's Rebranded Stablecoin
USDS is the successor to DAI, issued by Sky Protocol (formerly MakerDAO), with $8.43B in circulation and a yield-sharing model that pays holders the Sky Savings Rate directly on-chain.
Quick answer
USDS is the successor to DAI, issued by Sky Protocol (formerly MakerDAO), with $8.43B in circulation and a yield-sharing model that pays holders the Sky Savings Rate directly on-chain.
Sky Dollar (USDS) is the upgraded stablecoin issued by Sky Protocol, the rebranded version of MakerDAO — one of DeFi's oldest and most battle-tested protocols. Launched as part of MakerDAO's 'Endgame' strategic restructuring, USDS is designed to be a successor to DAI, with the same overcollateralized backing model but enhanced user-facing features including a native yield mechanism called the Sky Savings Rate (SSR). As of April 2025, USDS has $8.43 billion in circulation, making it the third-largest stablecoin globally.
From DAI to USDS: The Sky Migration
MakerDAO's Endgame plan, approved by MKR governance in 2023, involved a comprehensive rebranding: the protocol became Sky Protocol, MKR governance token holders could convert MKR to SKY tokens, and DAI holders could convert DAI to USDS at a 1:1 rate through the Sky.money interface. The migration is optional — DAI continues to exist and function as before — but USDS holders gain access to features unavailable to DAI holders, primarily the Sky Savings Rate.
Users can also access USDS directly by trading USDC, USDT, ETH, or SKY through Sky Protocol's liquidity pools, without needing to go through the vault/CDP process that underpins DAI minting.
The Sky Savings Rate
The Sky Savings Rate (SSR) is the primary differentiator between USDS and DAI. By depositing USDS into the SSR contract, users receive sUSDS (staked USDS) — a yield-bearing token that accretes value as protocol-generated interest accumulates. The SSR is funded by the interest paid by borrowers who mint USDS against collateral, distributing a portion of Maker/Sky protocol revenue directly to stablecoin holders.
This design mirrors the DAI Savings Rate (DSR) that MakerDAO introduced years earlier, but is positioned more prominently as a core product feature within the new Sky brand. The SSR rate is set by Sky governance and adjusts based on market conditions and protocol revenue.
Collateral Backing and Risk Profile
Like DAI, USDS is backed by a diversified basket of collateral managed through Sky Protocol's vault system. Accepted collateral includes ETH, wstETH, WBTC, real-world assets (RWAs) such as tokenized US Treasuries, and stablecoins like USDC and USDT. The inclusion of RWAs has been a significant driver of protocol revenue, as real-world asset yields are passed through to the protocol and ultimately to USDS/DAI savings rate holders.
The protocol enforces overcollateralization ratios for each collateral type, and liquidations occur when positions fall below the minimum ratio, protecting the system's solvency.
Protocol Data — USDS (Source: DeFiLlama)
The following metrics are sourced from DeFiLlama's stablecoin tracker. Data is approximate and subject to change.
Conclusion
USDS represents the evolution of DeFi's longest-running stablecoin experiment. By layering a native yield mechanism and a broader collateral base on top of DAI's proven overcollateralized model, Sky Protocol has created a stablecoin that competes with yield-bearing alternatives like sUSDe while maintaining the decentralization credentials that Maker built over eight years. With $8.43 billion in circulation and deep DeFi integrations inherited from DAI's decade of ecosystem building, USDS enters the market with structural advantages that newer stablecoins cannot easily replicate.
Frequently Asked Questions
What is Sky Dollar (USDS)?
USDS is the successor to DAI, issued by Sky Protocol (formerly MakerDAO), with $8.43B in circulation and a yield-sharing model that pays holders the Sky Savings Rate directly on-chain.
How does Sky Dollar (USDS) maintain its peg?
Sky Dollar (USDS) maintains its dollar peg through over-collateralised crypto assets or fiat reserves. The specific mechanism — whether over-collateralisation, algorithmic rebasing, or fiat-backed reserves — determines its stability profile, capital efficiency, and risk characteristics. Full details are available in the protocol's documentation.
Is Sky Dollar (USDS) backed 1:1 with US dollars?
That depends on the type of stablecoin. Fiat-backed stablecoins hold cash or cash-equivalent reserves at a 1:1 ratio. Crypto-backed stablecoins like DAI are over-collateralised and hold more collateral than the stablecoins issued. Algorithmic stablecoins may not hold 1:1 reserves at all times. Check Sky Dollar (USDS)'s official documentation for the exact backing structure.
What collateral backs Sky Dollar (USDS)?
Sky Dollar (USDS)'s collateral composition is defined in its smart contract parameters and may include cryptocurrencies, tokenised real-world assets, or fiat-equivalent deposits. The current collateral breakdown is typically published in real time via the protocol's dashboard or on-chain analytics tools such as DeFiLlama.
Is Sky Dollar (USDS) safe?
No stablecoin is entirely risk-free. Sky Dollar (USDS) carries risks specific to its peg mechanism, including collateral volatility, oracle failure, smart contract vulnerabilities, and regulatory action against its issuer or backing assets. Reviewing audit reports and understanding the peg mechanism is essential before holding significant amounts.
What are the risks of holding Sky Dollar (USDS)?
Risks include de-pegging events (where the stablecoin trades above or below $1), smart contract exploits, collateral liquidations, issuer insolvency (for fiat-backed variants), and regulatory restrictions. Historical de-peg events in the stablecoin market — including the collapse of TerraUSD in 2022 — underscore the importance of understanding each stablecoin's mechanism before committing capital.
Where can I buy or obtain Sky Dollar (USDS)?
Sky Dollar (USDS) can typically be acquired on decentralised exchanges (such as Uniswap or Curve Finance) or centralised exchanges. Some stablecoins can also be minted directly through the issuing protocol by depositing the required collateral. Check CoinMarketCap or CoinGecko for a list of exchanges listing Sky Dollar (USDS).
How can I earn yield on Sky Dollar (USDS)?
Sky Dollar (USDS) can be deposited into lending protocols such as Aave or Compound, supplied to DEX liquidity pools on Uniswap or Curve, or staked in the issuing protocol for protocol rewards. Yield rates fluctuate based on supply and demand. Always compare rates on aggregators like DeFiLlama's yield tracker before committing funds.
Who created Sky Dollar (USDS)?
Sky Dollar (USDS) was created by a team of blockchain developers or a decentralised protocol. Some stablecoins are issued by regulated companies (Circle issues USDC; Tether issues USDT), while others such as DAI are governed by a decentralised autonomous organisation (MakerDAO). Check the official Sky Dollar (USDS) website for publisher information.
How does Sky Dollar (USDS) compare to USDT and USDC?
USDT (Tether) and USDC (Circle) are the two largest stablecoins by market capitalisation and are both fiat-backed. Sky Dollar (USDS) may differ in its collateral type, decentralisation level, transparency, supported chains, and regulatory status. Decentralised stablecoins like DAI or USDe offer censorship resistance that fiat-backed alternatives cannot provide, at the cost of greater complexity and different risk exposures.