Stablecoins: What is USDS by Sky Protocol?
USDS—short for StableUSD—is the flagship stablecoin of Sky Protocol (formerly MakerDAO). Launched as the successor to DAI, USDS maintains a soft peg to the U.S. dollar while introducing enhanced stability mechanisms, decentralized governance, and multi-chain utility. It keeps MakerDAO’s principles of permissionless and non-custodial finance, while adding cross-chain capabilities and rewarding users within an evolved DeFi ecosystem.
History
USDS, the native stablecoin of Sky Protocol, is the next evolution of MakerDAO’s original DAI token. DAI, which launched in 2017, immediately became the most successful decentralized stablecoin, retaining its $1 peg with a unique structure of overcollateralized crypto assets. Trusted across DeFi, it established the standard for transparency and decentralization in stablecoins, paving way for USDS to expand on its foundation with improved scalability and cross-chain capabilities.
The shift from DAI to USDS began in August 2024, when MakerDAO rebranded as Sky Protocol to reflect its broader vision for decentralized finance. Just a month later, in September 2024, the protocol launched USDS —a more versatile and robust stablecoin designed to deliver improved stability, yield opportunities, and multi-chain support.
Adoption of USDS was rapid. By late 2024, its supply skyrocketed from around 100 million to over 2.3 billion, thanks to its strong decentralized foundation and attractive yield incentives. By January 2025, USDS had cemented itself as one of the top three stablecoins by market capitalization, standing alongside giants like USDC and USDT.
Sky Protocol also prioritized expansion beyond Ethereum. In November 2024, USDS deployed on Solana, bringing deep liquidity rewards and fostering integrations with DeFi platforms like Kamino Finance, Drift, and Save Finance. This move solidified USDS’s role as a truly cross-chain stablecoin, accessible and useful across multiple ecosystems.
Today, in 2025, USDS remains a cornerstone of decentralized finance. Its combination of stability, cross-chain utility, and native yield generation continues to attract both everyday users and advanced DeFi participants, positioning it as one of the fastest-growing assets in the stablecoin market.
What Makes USDS Unique
USDS builds on the foundation of DAI by remaining decentralized and permissionless. It is minted through over-collateralized vaults that can hold assets such as ETH, USDC, and tokenized real-world assets (RWAs).
Users can upgrade their existing DAI to USDS or swap USDC for USDS at a 1:1 rate. The protocol operates entirely under the governance of the Sky DAO, preserving a trustless structure that requires no centralized intermediaries.
Stability is a core focus of the USDS design, with surplus collateral and governance tools introduced to maintain a tighter dollar peg than its predecessor. This upgraded framework is powered by crowd-tested smart contracts—such as those following EIP-1271, ERC-4626, and UUPS proxy standards—ensuring resilience and adaptability over time.
Beyond its technical upgrades, USDS integrates seamlessly into Sky Protocol’s cross-chain vision through SkyLink, a secure bridge that enables permissionless transfers of USDS (and its yield-bearing counterpart, sUSDS) across Ethereum, Arbitrum, Optimism, Polygon, Avalanche, and other supported networks.
How USDS Is Used
USDS offers multiple ways for users to put their stablecoins to work. One of the most popular options is depositing into the Sky Savings Rate (SSR), which converts USDS into sUSDS—a liquid staking token that automatically accrues rewards over time.
This design allows users to earn yield without locking their funds, maintaining flexibility and liquidity. Alongside yield, USDS holders can also earn SKY governance tokens through the Sky Token Rewards (STR) program, which incentivizes minting, saving, and other protocol engagement.
The utility of USDS is not confined to Ethereum. Thanks to SkyLink and Solana’s Wormhole integration, users can move USDS across multiple chains and access opportunities in DeFi ecosystems like Kamino Finance, Drift, and Save Finance.
This combination of on-chain yield generation, governance rewards, and cross-chain liquidity makes USDS both a versatile and rewarding stablecoin for DeFi participants.
Protocols & Ecosystems
- Ethereum: Native standard platform; USDS and sUSDS compatible with ERC-1271, ERC-4626.
- Solana: Deployed in Nov 2024, with incentives for liquidity providers such as Drift and Save Finance.
- Layer 2s (Arbitrum, Optimism, Polygon, Avalanche): Planned via SkyLink, extending USDS reach across DeFi.
- Cross-chain DEXes & Bridges: Includes integration with Wormhole and SkyLink infrastructure.
USDS represents a bold leap forward from MakerDAO’s DAI—upgrading not just the stablecoin, but the entire ecosystem of trusted, permissionless DeFi. With robust collateralization, on-chain stability measures, revenue-sharing mechanisms, and cross-chain interoperability, USDS offers both yield and decentralization. Whether earning yields via SSR, accruing governance through STRs, or migrating assets across chains, USDS empowers users in a way few stablecoins can match.
You can buy, hold, and bridge USDS in the MEW Mobile app if you prefer using mobile, or by downloading the Enkrypt browser extension if you prefer using a web browser.
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