MakerDAO (Sky) review

MakerDAO is the original decentralized stablecoin protocol and the issuer of DAI, the longest-running crypto-collateralized stablecoin. Founded in 2014, it proved that an overcollateralized, on-chain stablecoin could hold its peg through multiple market crashes without a central issuer.

In 2024 the project rebranded to Sky, launching a new stablecoin, USDS, alongside DAI, and a new governance token, SKY, to replace MKR. The borrowing mechanism is unchanged in spirit: you lock collateral such as ETH, wstETH, WBTC, or rETH into a vault (a CDP) and mint USDS or DAI against it, paying a 'stability fee' instead of borrowing someone else's deposit.

Sky also offers the Sky Savings Rate — depositing USDS for sUSDS earns a governance-set yield (around 3.75% in Q2 2026), partly funded by real-world-asset collateral. For active borrowing, the related SparkLend market provides a more conventional money-market experience. Sky remains one of the most decentralized and transparent issuers in crypto.

Borrowing from Sky/MakerDAO means minting a stablecoin against collateral, not drawing from a lender's pool. Connect a self-custodial wallet to the Sky app (or to SparkLend) and open a vault.

Deposit collateral — ETH, wstETH, WBTC, or rETH are typical — into the vault. Each collateral type has its own parameters: a minimum collateralization ratio, a stability fee, and a debt ceiling.

Mint USDS or DAI against your locked collateral, staying safely above the minimum collateralization ratio. The newly minted stablecoin is sent to your wallet. You repay by returning the USDS/DAI plus accrued stability fee, which unlocks your collateral. There is no fixed term. If your collateral value falls so your ratio breaches the liquidation threshold, the vault is auctioned to cover the debt plus a penalty. Minted USDS can also be deposited for sUSDS to earn the Sky Savings Rate.

Sky/MakerDAO does not use a utilization curve. Borrowing cost is the stability fee — an annualized rate set per collateral type by SKY governance — and the savings yield is the Sky Savings Rate, also set by governance. Both are policy levers rather than purely market-driven prices.

In recent conditions, stability fees and equivalent Spark borrow rates have been observed around 6–7%, with our quoted 5–9% range reflecting variation across vault types and governance changes. The Sky Savings Rate has sat near 3.75%. Because these are governance-set, they can change when token holders vote, but they tend to move less erratically block-to-block than algorithmic DeFi rates.

To borrow most cheaply, pick the collateral type with the lowest stability fee that fits your assets, and watch governance proposals that adjust fees. Because USDS/DAI is minted (not borrowed from depositors), there is no utilization spike risk — your rate changes only when governance changes it.

Sky/MakerDAO is non-custodial and self-custodial: collateral sits in vault smart contracts under your control. The protocol has run since 2017 (DAI's launch) and survived the March 2020 crash, the 2022 deleveraging, and other stress events while keeping DAI broadly pegged — an unusually long live track record. Its contracts have been audited by multiple firms over the years.

The distinctive risk is exposure to real-world assets (RWAs) and to USDC, which back part of the stablecoin supply and introduce some centralization and counterparty exposure that pure crypto collateral would not. Governance is powerful: SKY holders can change fees, collateral types, and risk parameters, so users inherit governance risk.

For borrowers, the immediate risk is vault liquidation in a sharp drawdown, with a penalty. The rebrand from MakerDAO to Sky also created naming confusion (MKR/SKY, DAI/USDS) that occasionally trips up users, though it does not change the underlying security model.

Sky/MakerDAO is for users who specifically want to mint a decentralized stablecoin against their crypto rather than borrow from a lender — for example, an ETH or wstETH holder who wants USDS or DAI for spending or DeFi while retaining upside, and who values decentralization and a long track record. The Sky Savings Rate also appeals to anyone wanting a transparent, governance-set yield on stablecoins.

It is a weaker fit for people who want the lowest possible borrow rate (Compound and Aave are often cheaper), who want fiat-to-bank loans, or who find CDP mechanics and the MakerDAO-to-Sky rebrand confusing.

MakerDAO/Sky earns 8/10 as the pioneer and benchmark for decentralized stablecoins, with a battle-tested CDP model and a native savings rate few competitors match. Governance-set, RWA-backed mechanics make it more transparent and stable than algorithmic rivals, but also introduce governance and RWA/USDC exposure, and the Sky rebrand adds confusion. Skip it if you simply want the cheapest variable borrow rate or a fiat loan to your bank.