Coin columns · Ethereum City (Capital)
USDS: Sky’s Dollar Stablecoin and the Successor to DAI
Crypto collateral plus real-world assets, governed by votes
USDS is the dollar stablecoin launched in 2024 when MakerDAO, the creator of DAI, renamed itself Sky. It is designed to track one US dollar and can be swapped 1:1 with DAI.
1. From MakerDAO to Sky
MakerDAO launched DAI in 2017, and it became a basic dollar of Ethereum’s DeFi (decentralised finance). In August 2024 the project announced its new name, Sky, and in September it released USDS and a new governance token, SKY. Holders of the old MKR token can convert each one into 24,000 SKY.
USDS is not issued by a company but by the Sky Protocol, whose rules are set by votes of SKY holders. The overhaul followed the ‘Endgame’ plan proposed by MakerDAO co-founder Rune Christensen, and critics note his strong influence. DAI still exists, so users can choose either coin.
2. Holding the peg: over-collateral and reserves
USDS differs from fiat-backed coins such as USDT or USDC, whose issuers hold cash and Treasury bills. New USDS is created when users lock crypto such as ETH in a vault and borrow less USDS than the collateral is worth. If the collateral’s value falls too far, it is automatically sold to repay the debt, a process called liquidation.
The reserves also include a Peg Stability Module, which swaps USDC and USDS 1:1, and real-world assets (RWAs) such as short-term US Treasury bills. Users who deposit USDS receive sUSDS and earn the Sky Savings Rate, which governance sets.
3. Stars and many chains
USDS serves as a base dollar for lending, trading and payments in DeFi. Sky deploys its reserves through sub-projects called ‘Stars’. The first, Spark, runs lending and liquidity services and launched its own SPK token in 2025, while Grove focuses on institutional credit and tokenised assets.
USDS was first issued on Ethereum and can be bridged to networks such as Base, Arbitrum and Solana. On the Crypto Nation map, USDS stands in Ethereum City (the capital), because it was first issued on Ethereum.
4. Things to know: centralised assets and governance
A large share of the reserves sits in USDC and real-world assets managed by companies and financial institutions, so the ‘decentralised’ label comes with outside counterparty risk. In March 2023, when the Silicon Valley Bank crisis briefly pushed USDC below one dollar, DAI wobbled too.
Around the launch, a mention that USDS might include an address-freezing function drew a backlash from users. Critics also point out that key decisions, such as whether to drop wrapped bitcoin (WBTC) as collateral, can hinge on a few large holders. Smart-contract bugs and failed liquidations during sharp price falls are further risks.
Written from information public up to October 2026. It does not recommend or rate any coin and is not investment advice. If something is wrong, please tell us through the contact page.