USDS is the new flagship stablecoin of the Sky Protocol — the rebranded form of MakerDAO following its Endgame restructuring initiative, announced by founder Rune Christensen in 2022-2023 and progressively implemented through 2024-2025. USDS replaces DAI as the primary stablecoin product, though both tokens coexist during a transition period with a guaranteed 1:1 conversion between them, meaning existing DAI holders are not forced to migrate. The underlying mechanism remains unchanged: USDS is minted by locking accepted collateral (ETH, WBTC, liquid staking tokens, real-world assets) into Collateralized Debt Positions (CDPs), now officially called Vaults, with a minimum 150% collateralization ratio ensuring the system remains over-backed. The primary innovation in USDS is the Sky Savings Rate (SSR) — a native yield mechanism that distributes protocol revenue to USDS holders who stake into the sUSDS contract, similar in concept to MakerDAO’s Dai Savings Rate (DSR) but redesigned under the Sky brand. The broader Endgame restructuring also involves: renaming MKR governance token to SKY (at a 1:24,000 conversion ratio), creating SubDAO tokens (Maker-affiliated protocols like Spark Protocol), and introducing “Stars” — autonomous sub-entities that manage specific protocol functions. USDS maintains continuity of DAI’s ~$5B+ market cap backing while adding new product features under the Sky brand designed to improve user experience and protocol revenue.
Key Facts
- Protocol: Sky Protocol (rebranded MakerDAO)
- Predecessor: DAI (Dial → USDS transition)
- Mechanism: Over-collateralized CDPs (Vaults)
- Conversion: 1 DAI = 1 USDS (1:1 guaranteed, bidirectional)
- Yield mechanism: sUSDS (staked USDS) — Sky Savings Rate
- Governance token: SKY (rebranded MKR; 1 MKR = 24,000 SKY)
- SubDAO: Spark Protocol (lending market, fork of Aave)
- Website: sky.money
Endgame Restructuring
The Endgame plan’s key elements:
| Element | Old | New |
|---|---|---|
| Stablecoin | DAI | USDS (DAI remains valid) |
| Governance token | MKR | SKY (MKR remains valid) |
| Protocol brand | MakerDAO | Sky Protocol |
| UI | Oasis.app | sky.money |
| Staking yield | Dai Savings Rate (DSR) | Sky Savings Rate (SSR) |
| SubDAOs | None | Spark, Balancer partnerships |
| Stars | N/A | Autonomous sub-entities |
Sky Savings Rate (SSR)
The SSR is USDS’s primary value proposition:
- Mechanism: Deposit USDS into sUSDS contract → receive yield from protocol revenue
- Yield sources: Stability fees from Vault borrowers; RWA (Treasury bill) yield
- Rate range: ~5-6% APY (2024, tracking near-risk-free rate)
- Comparison: Similar to DAI’s DSR but with expanded marketing and product emphasis
- sUSDS: yield-bearing stablecoin derivative, similar to sFRAX or sDAI
DAI → USDS Migration
Migration process:
- Go to sky.money
- Connect wallet with DAI balance
- Convert DAI → USDS (1:1, no fees, no slippage)
- Optional: Stake USDS → sUSDS (earn SSR yield)
- Optional: Convert MKR → SKY (1:24,000 ratio)
Both DAI and USDS remain valid stablecoins indefinitely. No forced migration.
Related Terms
Sources
- “MakerDAO Endgame: Analysis of the Sky Protocol Restructuring” — Bankless / Maker Research (2022-2024). Comprehensive analysis of Rune Christensen’s Endgame proposal — examining the reasons for the restructuring (protocol governance paralysis, competitive pressure from centralized stablecoins, USDC dependency), the strategic goals (decentralization via SubDAOs, improved UX via rebranding, yield competitiveness via SSR), and whether the Endgame transformation strengthens or weakens MakerDAO’s position.
- “USDS vs DAI: Technical Comparison and Migration Guide” — DeFi Education Fund / USDS Technical Analysis (2024). Technical deep-dive comparing DAI and USDS mechanisms — examining the smart contract architecture, what changed (new SSR mechanism, new governance token structure, SubDAO integration) vs. what remained the same (CDP mechanics, collateral requirements, liquidations), and providing a comprehensive migration guide for DAI holders.
- “Sky Savings Rate: Yield Stablecoin Competition in 2024” — Messari / Yield Stablecoin Analysis (2024). Comparative analysis of the Sky Savings Rate vs. competing yield-bearing stablecoin products — examining sFRAX, Ethena’s sUSDe, USDC in Aave, and T-bill tokenization yield — assessing which products win on: yield rate, safety profile, DeFi composability, and mainstream user accessibility.
- “Spark Protocol: MakerDAO’s Aave Fork and SubDAO Strategy” — The Defiant / Spark Research (2023-2024). Analysis of Spark Protocol (SparkLend) — the first and largest MakerDAO/Sky SubDAO — examining the Aave v3 fork architecture, Spark’s unique advantages (direct USDS minting access, subsidized rates), governance structure (SPK token and relationship to MKR/SKY), and whether the SubDAO model creates meaningful value or fragments MakerDAO’s protocol.
- “RWA Yield and the Future of USDS Backing” — Arca / Real-World Asset Research (2023-2024). Analysis of MakerDAO/Sky’s strategy of investing protocol reserves in real-world assets (US Treasury bills, US MBS, corporate bonds) — examining the magnitude of RWA deployment ($2-4B at peak), the revenue generated ($200M+ annual run rate), the centralization and regulatory risks, and whether RWA backing is a long-term strength or vulnerability for USDS.