MakerDAO is now the Sky ecosystem. The project built the Maker Protocol and the DAI stablecoin, then introduced the SKY governance token and USDS stablecoin as part of its 2024 rebrand. DAI and USDS can coexist, but their features, governance and incentives are not identical. Users should verify current upgrade terms rather than assuming every legacy MakerDAO rule still applies.
What happened to MakerDAO?
MakerDAO began as a decentralised autonomous organisation governing a collateral-backed stablecoin system. In 2024 it rebranded to Sky and launched USDS alongside DAI. It also introduced SKY as the successor governance token to MKR under an upgrade process whose terms can change through governance.
The official Sky Protocol whitepaper explains the historical Maker system, the USDS stablecoin and the evolving governance structure. Because the ecosystem continues to change, users should consult current Sky interfaces and governance proposals before upgrading tokens or opening positions.
How the Maker Protocol creates stablecoins
The protocol allows approved collateral to be locked in smart-contract vaults. A user can generate stablecoins against that collateral up to defined limits. The position incurs a stability fee, and the collateral must remain above a required ratio.
If collateral value falls too far, the position can be liquidated. The system sells or transfers collateral according to its rules to cover debt and penalties. Overcollateralisation can reduce credit risk, but it does not eliminate losses during sharp price moves, thin liquidity or oracle failure.
DAI and USDS
DAI is the long-established, dollar-referenced stablecoin associated with MakerDAO. USDS is the newer Sky stablecoin. The official documentation describes both as collateral-backed balances within the multi-collateral system, while noting product and upgrade differences.
A soft peg is a target rather than a guarantee. Market demand, collateral quality, liquidity, governance decisions and redemption mechanisms can all affect price. Users must also distinguish between holding a stablecoin, depositing it in a savings product and deploying it through another DeFi protocol.
Core MakerDAO and Sky components
- Vaults: collateralised debt positions that generate DAI or related stablecoin balances.
- Collateral types: approved crypto assets and tokenised real-world assets with different parameters.
- Oracles: price inputs used to value collateral and trigger liquidations.
- Stability fees: charges applied to debt positions.
- Savings mechanisms: protocol features that may pay variable rates on eligible deposits.
- Peg modules: liquidity mechanisms involving selected reference assets.
- Governance: voting and executive processes that change parameters and contracts.
- Stars: more autonomous projects within the Sky ecosystem, subject to its framework.
Why MakerDAO mattered to DeFi
The protocol demonstrated that a stable digital asset could be created through transparent collateral rules rather than a conventional bank account alone. DAI became widely used across decentralised exchanges, lending markets and payment applications. MakerDAO also developed governance and risk-management practices that influenced later DeFi protocols.
Its evolution towards Sky shows that decentralised systems are not static. Token names, governance arrangements, collateral portfolios and legal interfaces can change. Historical decentralisation claims therefore need to be assessed against the current architecture.
Major MakerDAO risks
- Collateral risk: backing assets can lose value or liquidity.
- Stablecoin risk: DAI or USDS may trade away from the intended reference price.
- Liquidation risk: vault owners can lose collateral during market stress.
- Oracle risk: delayed or incorrect data can affect positions.
- Smart-contract risk: defects or upgrades can create technical exposure.
- Governance risk: concentrated participation or complex proposals can change user outcomes.
- Counterparty risk: real-world assets and external stablecoins introduce issuers, custodians and legal structures.
- Regulatory risk: stablecoin and token rules vary across jurisdictions.
A user due-diligence checklist
- Confirm whether the product uses DAI, USDS, MKR or SKY.
- Read the current token-upgrade terms and any penalties.
- Review vault collateral ratios, fees and liquidation penalties.
- Understand the backing and liquidity of each collateral type.
- Check the current savings rate and whether it can change.
- Verify official contract addresses and interfaces.
- Follow governance proposals that affect existing positions.
- Treat stablecoin yield as compensation for risk, not as a deposit guarantee.
Readers can explore the wider category in our guides to stablecoins and DeFi lending.
The bottom line
MakerDAO remains historically important, but the current system is Sky. DAI, USDS, MKR and SKY belong to related yet distinct parts of the transition. Before using a vault, savings product or token upgrade, verify the live rules, understand liquidation and governance risk, and avoid relying on an article written before the rebrand.
