MakerDAO (Sky Lending)

A decentralized lending protocol on Ethereum that enables users to lock digital assets as collateral to mint the USDS stablecoin, now operating as the Sky ecosystem with upgraded governance and yield features.

What is MakerDAO (Sky Lending)?

MakerDAO, launched in 2014 on Ethereum, pioneered decentralized lending by allowing users to create collateralized debt positions (CDPs), now called Vaults, where they deposit digital assets like ETH or WBTC to mint the overcollateralized USDS stablecoin (upgraded from DAI at a 1:1 ratio) against them, typically at 110-150% collateralization ratios. Borrowers pay stability fees of 0.5-5% annually, while the protocol auctions excess collateral during liquidations if ratios drop below thresholds. As of September 21, 2025, the Sky protocol’s total value locked (TVL) exceeds $17.35 billion across 20+ collateral types, including $1.2 billion in real-world assets (RWAs) like U.S. Treasuries, with USDS circulating supply at approximately $8.4 billion and over 634,797 active users.

Rebranded to Sky in September 2024 as part of the “Endgame” plan by co-founder Rune Christensen, the protocol introduced SKY as the upgraded governance token (1 MKR swaps for 24,000 SKY) and restructured into “Sky Stars”—independent subDAOs like SparkLend, which offers 6% yield on USDS deposits and 7% borrow rates on $2.5 billion TVL. Legacy DAI and MKR remain functional but lack new features like the Sky Savings Rate (SSR) at 4.75% APY for USDS holders and Sky Token Rewards distributing SKY emissions. Governance occurs via the Sky DAO, where SKY holders vote on parameters like fee adjustments, with $842 million staked in the Staking Engine for amplified voting power up to 2.5x based on lock duration.

Sky differentiates through non-custodial access via the sky.money app, supporting multi-chain deployments on Base and Optimism, and integrations with DEXs for seamless USDS swaps against USDC, ETH, and USDT. Despite a 2020 “Black Thursday” liquidation loss of $8.3 million from oracle failures, security has improved with Chainlink feeds and 25+ audits, though risks like basis volatility in RWAs persist, mitigated by a $50 million surplus buffer and diversified collateral. The rebrand faced community backlash, with only 10.7% MKR conversion initially, but a November 2024 vote upheld it with 80% approval from four major entities.