Crypto Gloss

MakerDAO / Sky Protocol

Definition:

Sky Protocol (formerly MakerDAO) is the rebranded form of the decentralized stablecoin protocol responsible for creating DAI — launched in August 2024 under the “Endgame” plan developed by MakerDAO founder Rune Christensen — introducing USDS (the new Sky Dollar stablecoin), SKY (the new governance token replacing MKR at a 24,000:1 conversion ratio), sUSDS (a yield-bearing savings version of USDS), and a modular governance framework using “SubDAOs,” while maintaining the existing DAI Savings Rate (DSR) and leaving DAI operational in parallel during a gradual migration period that provoked community debate about the direction of the protocol and the sustainability of the rebrand. MakerDAO remains the largest single issuer of decentralized stablecoin infrastructure by collateral value, managing tens of billions in assets across crypto collateral and real-world asset vaults.

MakerDAO Background

History:

MakerDAO was founded in 2014 by Rune Christensen. The Maker Protocol launched on Ethereum mainnet in December 2017 with Single-Collateral DAI (SAI). Multi-Collateral DAI launched in November 2019, opening collateral beyond ETH.

Core products (pre-Endgame):

  • DAI — Decentralized dollar stablecoin, soft-pegged to $1, over-collateralized by crypto assets (ETH, WBTC, staked ETH) and real-world assets (U.S. Treasuries, corporate bonds)
  • Vaults — Users deposit collateral and borrow DAI against it; stability fees accrue as protocol revenue
  • MKR — Governance token; MKR holders vote on system parameters; MKR is burned with surplus revenue
  • DSR — Dai Savings Rate; yield paid to DAI depositors, funded by stability fee revenue

The Endgame Plan

Rune Christensen published the “Endgame” governance whitepaper in 2022, proposing a major restructuring of MakerDAO:

Core goals:

  1. Long-term governance sustainability (reduce voter apathy and vulnerability to governance attacks)
  2. Protocol resilience (diversification away from crypto collateral volatility)
  3. Scalability (subDAO structure to independently develop new use cases)
  4. Revenue sufficiency (real-world assets generating yield to sustain DSR and operations)

Real-world asset strategy:

To fund a high DSR and protocol operations without inflationary token issuance, MakerDAO deployed billions in RWA (real-world assets):

  • U.S. Treasury bills and bonds via institutional intermediaries
  • At peak in 2023: $2.5B+ in U.S. Treasuries
  • Portfolio managed via Monetalis Clydesdale, BlockTower Andromeda, and other SPV structures

The Sky Protocol Rebrand (2024)

In August 2024, MakerDAO began transitioning to “Sky Protocol”:

New token: USDS (Sky Dollar)

  • 1:1 fungible with DAI (DAI can be upgraded to USDS and back)
  • No algorithmic or mechanical differences initially — same collateral backing, same peg mechanism
  • Future planned feature: USDS may have “optional features” including potential compliance functions (controversial)

New governance token: SKY

  • Replaces MKR in the new Sky Protocol ecosystem
  • Conversion ratio: 1 MKR = 24,000 SKY
  • MKR remains valid and convertible at any time
  • SKY token has lower per-unit price making it more accessible for retail governance participation
  • MKR → SKY conversion is one-directional in the smart contracts

sUSDS (Savings USDS):

  • Equivalent of sDAI but for USDS
  • ERC-4626 yield-bearing wrapper for USDS deposited at the Sky Savings Rate (SSR)
  • SSR rate is set by Sky governance, functions identically to DSR

SubDAO Framework:

The Endgame plan introduced SubDAOs — semi-independent new protocols under the Sky umbrella, each with their own governance tokens, serving specialized functions (lending, bridges, RWA management). Examples: Spark (lending), Spark SubDAO

Community Controversy

The rebrand generated significant pushback:

MKR holders:

  • Questioned the SKY conversion ratio and whether SKY accurately preserves MKR’s long-term value accrual
  • Some MKR holders viewed the rebrand as dilutive

DAI users:

  • Concerns that USDS could eventually include censorship or compliance features (freeze/blacklist functions) that DAI never had
  • “Optional” compliance features were framed as optional in the whitepaper but worried community members
  • DeFi users dependent on DAI’s uncensorable properties viewed USDS with skepticism

Rebuttal from Rune:

MakerDAO / Sky maintained that DAI would remain available indefinitely during the transition period and that no compliance changes had been implemented or planned for the near term.

Current State (2025)

  • Both DAI and USDS circulate in parallel
  • MKR and SKY both tradeable; conversion available
  • DSR and SSR both operational
  • Spark Protocol (Spark SubDAO) continues as Sky’s native lending front-end
  • USDS adoption growing on Coinbase, Aave, and integrated DeFi protocols
  • RWA portfolio adjusted based on interest rate environment

Related Terms

Sources

Last updated: 2026-04