Sky vaults

Sky, formerly MakerDAO, is the decentralised protocol behind the DAI and USDS stablecoins. Its white paper traces the original Dai to December 2017, and in September 2024 the protocol launched USDS and the SKY token as upgrades of DAI and MKR, with DAI and USDS convertible one-to-one. USDS is backed by stablecoin reserves, crypto-collateralised loans, US Treasury bills and other approved assets. The white paper also notes that Sky governance could upgrade USDS to add a freeze function.

Savings USDS and Savings DAI. sUSDS earns the Sky Savings Rate, which SKY holders set through onchain governance and which is funded by protocol revenue from collateralised loans, Treasury bills and lending markets. The rate is variable and can change at any time or fall to zero. sUSDS charges no deposit or withdrawal fees, and sDAI works the same way for DAI through the older DAI Savings Rate.

Staked USDS. stUSDS is a higher-risk module that lends USDS to borrowers who post staked SKY as collateral. It earns the SKY borrow rate on the lent share and the Sky Savings Rate on the rest, so its yield moves with utilisation. Only USDS that is not lent out can be withdrawn, so exits can be delayed or partial when utilisation is high. Depositors take first-loss exposure: if liquidations of SKY collateral fall short, stUSDS absorbs the bad debt, which ties its risk closely to the SKY price. The stUSDS code also notes that depositors must trust Sky governance, which can upgrade the contract.