Sky (MakerDAO)

At a glance

What it does

Sky mints USDS in two main ways. A user can lock crypto collateral, such as ETH or wrapped bitcoin, in a vault and borrow USDS against it, paying a stability fee. Or a user can swap USDC for USDS one-to-one.

A Peg Stability Module (PSM) is the contract that performs that swap. It lets arbitrageurs defend the one-dollar price without touching the crypto vaults, and it is why a large part of Sky's reserve is USDC. The rest of the backing sits in crypto vaults, in Treasury bills and real-world-asset loans placed with outside managers, and in allocations run through Spark.

Sky pays savers through the Sky Savings Rate. Holders who deposit USDS receive sUSDS, which paid about 3.6% a year in September 2026, down from 8.75% in February 2025, according to DefiLlama. The rate is set by Sky governance and funded by the protocol's income from crypto-backed loans, Treasury bills and liquidity provision.

The rebrand also changed the token. MKR converted into SKY at 24,000 to one, DAI can be swapped for USDS at one to one, and semi-independent units called Stars, starting with Spark, run their own businesses on Sky's balance sheet. The USDS contract on Ethereum has no freeze or blocklist function, but unlike DAI it is upgradeable, so governance could add one by changing its code.

How it is different

Circle and Tether are companies holding bank and Treasury assets. Sky is code plus governance, holding a mix of crypto, tokenized debt and its competitor's stablecoin. That makes it more transparent on-chain, since vaults and the PSM are visible on Ethereum, but it also makes its peg partly dependent on Circle.

Sky's RWA role runs through Spark. Spark allocated reserves into tokenized Treasury funds through its 1 bn USD Tokenization Grand Prix, with Chronicle as oracle, and SparkLend is the largest single market secured by RedStone feeds on DefiLlama. Few buyers of tokenized funds are as large or as public.

Where it fits

How a peg holds explains over-collateralized and hybrid designs. How stablecoin issuers make money covers the savings rate. RWAs in DeFi shows Sky and Spark as buyers of tokenized Treasuries. A short history of stablecoins covers DAI in the March 2023 crisis. Related profiles: Chronicle, Centrifuge, Circle.

Risks and open questions

The USDC link cuts both ways. On 11 March 2023, when USDC fell to about 0.87 USD after the SVB failure, DAI fell to about 0.88 USD, because the module that makes arbitrage cheap also imports USDC's shock.

Governance decides the risk. SKY holders vote on how much goes into real-world loans versus crypto, and off-chain loan defaults are hard to see on-chain.

The legal status is open. Sky has no issuer-person in the GENIUS Act sense, and whether USDS or DAI counts as a US payment stablecoin was unresolved in September 2026. The savings rate may also face questions under the yield ban.

What to watch next

• The Sky Savings Rate against Treasury yields: if the rate falls below what money funds pay, sUSDS loses its main draw.
• The share of RWA in the reserve, and whether it replaces USDC in the PSM.
• DAI's migration to USDS, and whether governance ever uses USDS's upgradeability to add controls such as a freeze, which DAI cannot have.
• Any US guidance on protocols without a legal issuer.