MakerDAO (Sky Protocol) in 2026: DAI, USDS and Earning From the Protocol That Backs Them

MakerDAO has been the bedrock of decentralized finance since 2017, pioneering the first truly decentralized stablecoin: DAI. In 2024–2026, the protocol underwent its most significant transformation — rebranding to Sky Protocol while introducing a new stablecoin USDS and governance token SKY. Today, MakerDAO / Sky Protocol manages over $8 billion in collateral, offers one of the most reliable savings rates in DeFi (the Dai Savings Rate, now extended as Sky Savings Rate), and powers a growing ecosystem of sub‑protocols called Sky Stars. This comprehensive guide explains everything you need to know: how DAI and USDS are generated, how to earn yield, the risks of the collateral basket, and practical strategies to make the protocol work for you.

🏛️ From MakerDAO to Sky Protocol: The 2026 Evolution

MakerDAO launched in 2017 as a decentralized credit platform that allowed users to generate DAI — a stablecoin soft‑pegged to $1 — by depositing collateral (initially only ETH) into smart contracts called Vaults. Over the years, the protocol expanded its collateral types, introduced the Dai Savings Rate (DSR), and became the backbone of DeFi lending. In 2024, after a community vote, MakerDAO initiated the Endgame Plan, a sweeping rebrand to Sky Protocol. The goals were simple: simplify user experience, scale decentralized stablecoin adoption, and create a more robust governance framework.

Today, Sky Protocol operates alongside the original MakerDAO infrastructure. DAI remains the flagship decentralized stablecoin, while a new stablecoin called USDS (Sky Dollar) was introduced with a more direct yield mechanism. The protocol’s governance token MKR was optionally convertible to SKY at a ratio of 1 MKR = 24,000 SKY (as of 2026, both tokens trade in parallel). The rebrand also introduced the Sky Savings Rate (SSR), which complements the classic DSR and offers yield on USDS deposits. This dual‑token, dual‑stablecoin architecture gives users more flexibility: DAI for deep DeFi integration, USDS for higher yield potential within the Sky ecosystem.

💎 How DAI and USDS Are Generated: Over‑collateralization Explained

Both DAI and USDS are over‑collateralized stablecoins. Unlike USDC or USDT (which are backed by fiat reserves), DAI and USDS are minted when users deposit crypto assets into a Maker/Sky Vault. For example, depositing $10,000 worth of ETH into a vault with a minimum collateral ratio of 150% allows you to generate up to $6,666 of DAI or USDS. The extra 33% collateral acts as a buffer against price volatility. If the value of your deposited collateral falls below the required ratio, your vault becomes eligible for liquidation — the protocol sells your collateral to cover the outstanding debt.

In 2026, the supported collateral basket includes:

• ETH (Ethereum) – the original and most trusted collateral.
• wstETH (Lido staked ETH) – allowing staked ETH to be reused as collateral.
• rETH (Rocket Pool staked ETH).
• USDC / USDT – centralized stablecoins used as collateral for minting DAI/USDS.
• WBTC (Wrapped Bitcoin).
• DSR / sUSDS – yield‑bearing versions can be re‑collateralized in advanced strategies.

Each collateral type has its own risk parameters: stability fee (interest rate), liquidation ratio (e.g., 150% for ETH, 130% for USDC), and debt ceiling. The protocol’s governance (SKY/MKR holders) adjusts these parameters to maintain DAI’s peg and overall stability. When you mint DAI or USDS, you pay an annual stability fee (currently around 5–8% depending on collateral) — this fee is what funds the DSR and Sky Savings Rate.

For a deeper understanding of how lending and collateral works across different DeFi protocols, read our Aave v3 guide and Morpho Protocol deep dive.

💰 Dai Savings Rate (DSR) and Sky Savings Rate (SSR): Earning Stable Yield

The Dai Savings Rate (DSR) is a smart contract that allows anyone who holds DAI to deposit it and earn a variable yield, funded by the stability fees paid by borrowers. In 2026, the DSR typically ranges between 5% and 8% APR, depending on protocol demand. The Sky Savings Rate (SSR) is the equivalent for USDS holders, often offering a slightly higher yield (by 0.5–1%) to incentivize adoption of the new stablecoin.

How to use DSR/SSR:

• Acquire DAI (via minting or on a DEX like Uniswap, Curve).
• Go to the Sky Protocol app (sky.money) or use a front‑end like Oasis.app.
• Deposit DAI into the DSR contract, or USDS into the SSR contract.
• Yield accrues automatically every second; you can withdraw at any time with no lock‑up.

The DSR is considered one of the safest yields in DeFi because it relies on protocol revenue rather than inflationary token emissions. However, the rate is variable and can drop to near‑zero during periods of low borrowing demand. In 2026, the average DSR has been around 6.8% — significantly higher than traditional savings accounts and even most stablecoin lending on Aave (which offers ~4.5% on USDC).

✨ Sky Stars Sub‑protocols: Expanding the Ecosystem

As part of the Endgame Plan, MakerDAO launched Sky Stars — independent sub‑protocols that build on top of Maker/Sky infrastructure. Each Star has its own token, risk profile, and yield opportunities, but they all contribute to the demand for DAI/USDS. The most prominent Sky Stars in 2026 include:

• Spark Protocol – a lending and borrowing market that uses DAI as its primary stablecoin, offering leveraged staking and lending pools. Spark has attracted over $1.5B in TVL.
• Morpho Blue (via Spark) – an efficient lending layer that matches borrowers and lenders peer‑to‑peer to improve rates.
• Sky Savings Vaults – automated yield strategies that deposit DAI into the DSR and then re‑hypothecate the yield token.
• SubDAO tokens – each Star issues its own governance token (e.g., SPK for Spark) that can be farmed by interacting with the sub‑protocol.

By participating in Sky Stars, users can earn additional yield on top of the DSR. For example, depositing DAI into Spark’s lending pool not only earns the base DSR but also SPK token rewards. The combined APY can reach 12–15% during high‑incentive periods.

🗳️ SKY Token: Governance and Migration from MKR

MKR has been the governance token of MakerDAO since inception, giving holders the right to vote on risk parameters, collateral additions, and protocol upgrades. With the rebrand to Sky Protocol, MKR holders were given the option to migrate to SKY at a ratio of 1 MKR = 24,000 SKY. As of 2026, both tokens exist in parallel, but the long‑term vision is for SKY to become the primary governance token for the Sky ecosystem, while MKR remains a legacy token for the classic MakerDAO system.

SKY token holders can participate in governance through the Sky Governance module, voting on:

• Stability fee adjustments for each collateral type.
• Changes to the DSR / SSR.
• Addition of new collateral types or Sky Stars.
• Protocol parameter updates (debt ceilings, liquidation ratios).

SKY also captures value through a buy‑and‑burn mechanism: a portion of stability fees is used to buy SKY from the market and burn it, reducing supply over time. Since the rebrand, the annualized burn rate has been approximately 2–3% of supply, creating deflationary pressure. You can acquire SKY via DEXs (Uniswap, Aerodrome) or centralized exchanges (Coinbase, Kraken).

📈 How to Earn From MakerDAO / Sky Protocol

There are four primary ways to generate income from the MakerDAO / Sky ecosystem, ranging from passive to active strategies:

1. DSR / SSR savings (passive, low risk)

Deposit DAI into the DSR contract or USDS into the SSR contract. Yield is paid in DAI or USDS respectively, with rates typically 5–8% APR. No lock‑up, no impermanent loss. Best for capital preservation.

2. Provide liquidity on DEXs with DAI/USDS pairs

Stablecoin pairs like DAI/USDC, USDS/USDC, or DAI/USDS on Curve or Uniswap offer trading fees plus liquidity mining rewards. The main risk is impermanent loss (minimal between stablecoins) and smart contract risk. APYs range from 3% to 10%.

3. Farm Sky Stars tokens (higher risk, higher reward)

Interact with Spark Protocol or other Sky Stars by depositing DAI/USDS into their lending pools or vaults. You earn the base DSR plus SPK (or other Star tokens) emissions. These tokens can be sold for additional yield. APYs can exceed 15% but come with inflation risk (token price may drop).

4. Governance participation (SKY staking)

Stake SKY tokens in the governance module to earn a share of protocol fees (a portion of stability fees is distributed to stakers). Staking yield is variable, currently around 4–6% APR, but provides voting power. Staking also locks tokens for a cooldown period (typically 7 days).

For a full list of passive income methods across all of DeFi, check our crypto passive income guide (8 methods) and the stablecoin yield comparison.

⚠️ Risks of the Collateral Basket and Liquidation Mechanisms

While MakerDAO / Sky Protocol has an excellent security track record (no major hacks in over 8 years), there are important risks to understand:

• Liquidation risk for vault owners: If the value of your collateral drops below the minimum ratio, your vault will be liquidated and you’ll incur a 13% liquidation penalty. Always monitor your collateral health factor.
• Oracle risk: The protocol relies on price oracles (Chainlink, Uniswap TWAP). If an oracle is manipulated or fails, incorrect prices could trigger unnecessary liquidations or cause the peg to break.
• Collateral concentration risk: A large portion of DAI is backed by USDC (centralized). If USDC were to depeg or become restricted, the stability of DAI could be threatened. The protocol is actively diversifying into ETH and stETH collateral.
• Smart contract risk: Although audited by top firms, the DSR, Vaults, and Sky Stars contracts are complex. A critical bug could lead to loss of funds.
• Regulatory risk: The USDS stablecoin and SKY token may be subject to securities classification in some jurisdictions.

To mitigate these risks, never deposit more than you can afford to lose, use a hardware wallet for governance participation, and regularly review your vault’s liquidation price.

❓ Frequently Asked Questions