Maker is the protocol behind DAI, the largest decentralized stablecoin in crypto. Unlike USDC or USDT, which are backed by centralized reserves of cash and treasuries, DAI is minted by users who lock up crypto assets as collateral in Maker Vaults. This makes DAI censorship-resistant — no company can freeze your DAI balance or blacklist your wallet. MakerDAO has evolved from a single-collateral system into one of the most sophisticated DeFi protocols, accepting dozens of collateral types including ETH, WBTC, stablecoins, and even real-world assets like US Treasuries. The protocol generates revenue from stability fees (interest charged to borrowers) and has built a substantial surplus of hundreds of millions of dollars. The protocol underwent a major rebrand to "Sky" in 2024, with DAI becoming USDS and MKR becoming SKY. However, the underlying protocol mechanics remain the same, and many users and platforms continue to reference the original branding.
MakerDAO launched on Ethereum mainnet in December 2017 as the first major DeFi protocol. Single-Collateral DAI (backed only by ETH) was replaced by Multi-Collateral DAI in November 2019. The protocol survived the March 2020 "Black Thursday" crash where rapid ETH price drops caused under-collateralized liquidations. Maker gradually added real-world assets as collateral, including US Treasury exposure through partnerships with Monetalis and BlockTower. The 2024 "Endgame" rebrand to Sky/USDS marked a strategic pivot, though the original Maker/DAI branding persists widely.
Users deposit collateral into Maker Vaults (smart contracts) and mint DAI against that collateral. Each vault type has specific parameters: collateral ratio (typically 150%+), stability fee (annual interest), and liquidation threshold. If collateral value drops below the required ratio, the vault is liquidated through an auction system. DAI maintains its $1 peg through supply and demand mechanics. When DAI trades above $1, it becomes cheaper to mint (borrow) DAI, increasing supply. When DAI trades below $1, it becomes attractive to buy DAI cheaply and repay loans. The Dai Savings Rate (DSR) allows DAI holders to earn yield by depositing into the DSR contract, creating additional demand for the stablecoin.
MKR has a total supply of approximately 977,000 tokens — one of the lowest supplies in DeFi. MKR is used for governance and as a backstop: if the protocol becomes under-collateralized, new MKR is minted and sold to cover the deficit (diluting holders). Conversely, protocol surplus can be used to buy back and burn MKR. This creates direct alignment between protocol health and MKR value. The rebrand introduced SKY tokens at a 1:24,000 ratio to MKR.
DAI/USDS is the most widely used decentralized stablecoin, integrated across hundreds of DeFi protocols and accepted as collateral everywhere.
Maker earns hundreds of millions annually from stability fees and RWA yields, with governance able to direct surplus to MKR buybacks.
Unlike USDC or USDT, DAI cannot be frozen or blacklisted by any centralized entity — a critical property for truly permissionless finance.
With under 1 million MKR tokens and active buyback programs, MKR has among the strongest supply-demand dynamics in DeFi.
The multi-collateral vault system, liquidation mechanics, and governance processes are complex and intimidating for new users.
Significant DAI backing now comes from US Treasuries and other real-world assets, introducing the centralization risk DAI was designed to avoid.
MakerDAO's governance requires constant attention to risk parameters across dozens of collateral types, leading to voter fatigue and low participation.
The Sky/USDS rebrand has created confusion in the market, with many users and protocols still using the Maker/DAI branding.
DAI is decentralized — created by users locking crypto collateral, with no entity able to freeze balances. USDC is issued by Circle, backed by bank deposits and treasuries, and Circle can blacklist addresses. DAI offers censorship resistance; USDC offers regulatory compliance and simpler redemption.
In 2024, MakerDAO rebranded to Sky Protocol, with DAI becoming USDS and MKR becoming SKY (at 1:24,000 ratio). The rebrand was part of the Endgame plan to restructure governance. Both old and new tokens coexist, with most of the market still using Maker/DAI terminology.
MKR captures value through buyback-and-burn funded by protocol surplus. When Maker earns more from stability fees than it spends on operations, the excess buys MKR from the open market and burns it permanently. This creates a direct link between protocol revenue and MKR scarcity.
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Learn how to purchase: How to Buy Maker