MakerDAO launched DAI in 2017, building one of DeFi’s first decentralized stablecoins from scratch. For years, DAI was the default unit of account across on-chain lending, trading, and liquidity pools. In 2024, the protocol rebranded as Sky, renaming its stablecoin from DAI to USDS and its governance token from MKR to SKY.

The change was not cosmetic. It came bundled with a structural overhaul called Endgame, designed to scale the protocol and reduce the governance gridlock that had slowed down large decentralized autonomous organizations.

New Tokens, Same Backing

Sky introduced two tokens to replace the originals. USDS, called the Sky Dollar, replaced DAI as the main stablecoin. SKY replaced MKR as the governance and utility token. Existing holders can convert at fixed ratios: 1 DAI upgrades to 1 USDS, and 1 MKR converts to 24,000 SKY.

DAI was not retired. The protocol kept it in circulation as a legacy token, meaning existing smart contract integrations continue to function without changes. The upgrade is optional and reversible. You can convert DAI to USDS and back at any time through the Sky app.

This dual-token approach was intentional. DAI has deep integrations across hundreds of DeFi protocols, and forcing a hard migration would have broken too many things. Instead, Sky is letting adoption happen gradually as new users and protocols choose USDS from the start.

The Endgame Restructuring

Endgame is a plan developed by MakerDAO founder Rune Christensen over several years. The core idea is to split the protocol into smaller, semi-autonomous units called SubDAOs, each focused on a specific area: real-world assets, DeFi lending, or specific geographic markets.

Each SubDAO has its own governance token, issued partly as farming rewards to SKY holders. The theory is that smaller groups make faster decisions, and delegating operational choices to SubDAOs frees the core protocol to focus on USDS stability and reserve management.

The restructuring also aims to reduce the workload on MKR-level governance, which had become a bottleneck. Proposals that would have required full DAO votes under the old structure can now be handled at the SubDAO level.

Real-World Assets in the Reserve

Before the rebrand, MakerDAO made a strategic shift that fundamentally changed what backs DAI. Starting in 2022, the protocol allocated a significant portion of its reserves to real-world assets, primarily U.S. Treasury bills, through arrangements with off-chain asset managers.

That shift generated substantial yield during the high-rate environment of 2022 through 2024. It also introduced centralization risk. Real-world asset collateral depends on legal agreements, custodians, and counterparties outside the blockchain, which is a different risk profile from crypto-native collateral like ETH.

The Sky protocol has continued to hold RWA allocations while also expanding DeFi-native collateral options. How it balances those two categories over time will influence how decentralized USDS actually is.

The Sky Savings Rate

One feature Sky introduced alongside USDS is the Sky Savings Rate, a native yield mechanism built directly into the protocol. USDS holders can deposit into the Sky savings contract and earn yield without sending funds to a third-party lending pool.

The rate is set by Sky governance and funded from protocol revenue, which comes from stability fees charged to borrowers. This gives USDS a structural advantage over stablecoins like USDC that require external steps to generate yield.

A More Crowded Market

USDS enters a stablecoin market that looks very different from when DAI launched. Tether’s USDT and Circle’s USDC dominate by volume. Ethena’s USDe has grown quickly through a delta-neutral yield model. Aave’s GHO and Frax’s FRAX compete for DeFi-native stablecoin share.

DAI built its reputation by being the only serious decentralized alternative for years. USDS does not have that clear field. It competes on the basis of its savings rate, its deep DeFi integrations inherited from DAI, and its track record of maintaining a dollar peg through multiple market cycles.

What Has Not Changed

The fundamental mechanism is the same. Users deposit collateral, mint USDS against it at a loan-to-value ratio determined by governance, and pay a stability fee on the borrowed amount. If the collateral falls below the minimum ratio, it gets liquidated automatically.

That model has held through crypto winters, exchange collapses, and the March 2020 crash where ETH lost half its value in hours. The core protocol survived all of it. Sky is betting that the same mechanics, combined with new governance structures and a refreshed brand, can keep it competitive in DeFi’s next phase.

The MakerDAO name carried weight because of a decade of performance. Sky is asking the market to transfer that trust to a new brand while keeping the same underlying engine running.