Swap USDS at the Best Rate

What is USDS?

USDS is a soft pegged stablecoin that targets one US dollar. It is not a bank deposit token: no single company holds dollars against it. Instead the Sky Protocol issues USDS against a collateral pool, the same credit machinery that has backed DAI since 2017, under a new brand adopted in August 2024.

DAI did not go away. Both tokens coexist and convert one to one through the protocol, so USDS is best read as the flagship issue of the system and DAI as the immutable original. The rebrand was part of Endgame, a restructuring plan that MakerDAO governance approved to reorganize the protocol.

How USDS works

USDS enters circulation three ways: borrowers mint it against overcollateralized vaults, holders upgrade DAI one to one, or anyone converts USDC through the Peg Stability Module. Collateral spans crypto assets, USDC reserves and tokenized real world credit deployed through allocator subDAOs such as Spark and Grove, which Sky calls Agents.

Holders can deposit USDS into the Sky Savings Rate and receive sUSDS, a token that accrues the governance set rate, or earn SKY token rewards for supplying USDS, with both features restricted in some jurisdictions including the United States and United Kingdom. Rates are policy levers, set and changed by governance votes.

USDS supply and tokenomics

Supply is elastic: USDS is minted when loans open or conversions occur and burned when they unwind, so circulation tracks demand for the system's credit and yield. The peg holds through arbitrage against the one to one USDC conversion window and through rate policy rather than a fixed reserve ratio.

How USDS is governed

Sky is governed by the SKY token, which replaced MKR at a rate of 24,000 SKY per MKR. Token votes set savings and stability rates, onboard collateral and control contract upgrades. Unlike DAI, the USDS contract is upgradeable and was designed so a freeze function could be added, a choice that drew criticism when announced; co-founder Rune Christensen argued the capability is necessary to safely scale a stablecoin backed by real world assets.

Who builds USDS

MakerDAO pioneered the collateralized stablecoin model with DAI in 2017 under co-founder Rune Christensen. The Sky era decentralizes the work into subDAO Agents: Spark focuses on lending and liquidity deployment while Grove manages institutional credit, each with its own team and token but borrowing from the same balance sheet.

USDS risks and considerations

USDS inherits collateral risk from everything behind it: crypto price crashes, USDC issuer exposure through the conversion module, and off chain counterparty risk from tokenized real world assets. Overcollateralization absorbs losses only up to a point, and allocator concentration in a few Agents ties outcomes to their underwriting.

Governance is also a risk surface. Rates can change by vote, and the upgradeable contract means future versions could carry compliance controls such as address freezing that immutable DAI cannot. Users who prioritize censorship resistance can stay in DAI; users who hold USDS accept the policy layer.