USDS
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What is USDS?
USDS is the stablecoin of the Sky era, the direct successor to DAI after the rebrand of MakerDAO executed by Rune Christensen and the Maker community during 2024. The Sky brand groups together the protocol, the SKY governance token (successor to MKR) and the USDS digital dollar with one-to-one parity to DAI during the transition phase.
How it works
USDS maintains 1:1 parity with the US dollar through overcollateralized crypto collateral (ETH, wBTC, stETH and others) plus tokenized US Treasury bonds that generate yield for the protocol. The model is similar to classic DAI, with the innovation of the Sky Savings Rate: a simplified mechanism that distributes the real yield from the Treasuries to holders without needing to operate complex contracts like Maker's old DSR. During the transition phase, DAI and USDS coexist and are interchangeable one-to-one.
Use cases
USDS functions as the reference decentralized stablecoin in DeFi, an alternative to USDT and USDC with lower centralized counterparty risk. It is the base asset of many lending protocols (Aave, Spark) and DEXs (Curve). Holders who activate the Sky Savings Rate receive real yield from the return on the Treasuries that back the protocol, which makes it one of the few decentralized stablecoins that distributes structural yield to its users.
Regulatory position
Sky's strategy seeks to position itself as the reference decentralized stablecoin in a post-MiCA era, compatible with European regulatory requirements without giving up the protocol's non-custodial nature. The main challenge: decentralized stablecoins do not fit fully into the MiCA categories (which are designed for centralized issuers), which generates regulatory uncertainty. Sky has invested in legal structures that allow it to operate under the European framework while maintaining significant decentralization.
Frequently asked questions
What is USDS?
USDS is the stablecoin of the Sky era (formerly known as MakerDAO), launched in 2024 as the direct successor to DAI after the protocol's rebrand. It maintains 1:1 parity with the US dollar through overcollateralized crypto collateral and tokenized US Treasury bonds. It is interchangeable one-to-one with DAI during the transition phase.
What is the difference between USDS and DAI?
DAI and USDS are interchangeable one-to-one during the transition phase. The main difference is operational: USDS is part of the new Sky brand with a simplified yield mechanism (Sky Savings Rate) that distributes the real return of the protocol's Treasuries to holders without needing to use the complex old DSR. The intention is to migrate progressively to USDS as the main stablecoin of the Sky ecosystem.
Is USDS truly decentralized?
USDS is more decentralized than USDT or USDC (without a single centralized issuer) but less pure than purely algorithmic stablecoins. The Sky protocol has distributed governance via the SKY token (successor to MKR), although the founding team and the foundation maintain significant influence. The collateral includes tokenized Treasury bonds that depend on centralized custodians, which introduces some institutional dependence.
How does USDS generate yield?
Holders who activate the Sky Savings Rate receive yield from the return on the tokenized US Treasuries that back part of the protocol's collateral. The rate varies according to market conditions and the protocol's capital allocation. It is one of the few cases of a decentralized stablecoin that distributes real structural yield (not inflated with incentives in other tokens).
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