We are reviewing DAI at a strange moment: the month it officially stops being the main character. The multi-year migration from MakerDAO to Sky wrapped up in August 2026. DAI liquidity is rolling 1:1 into the new USDS token, and exchanges are quietly retiring DAI support chain by chain. So consider this DAI review part obituary, part handover, and part honest look at whether the “decentralized stablecoin” ideal survived its own success.
What Is DAI?
DAI is crypto’s original decentralized stablecoin, launched in 2017 by MakerDAO. Instead of a company holding dollars in a bank, DAI mints when users lock crypto collateral into on-chain vaults and borrow against it. No CEO signs off, no bank holds the keys, and governance runs through token votes.
That design made DAI fundamentally different from everything else in this series. Tether, USDC, and USD1 are IOUs from companies. DAI is a claim on a smart contract system, which is why purists defended it for years as the only stablecoin worthy of the name.
In 2026, DAI lives inside the Sky ecosystem, formerly MakerDAO, alongside its successor token USDS. The two convert 1:1 both ways through an official converter with zero fees and zero slippage. Combined supply puts the Sky stablecoin family around the number three spot globally, in the $8 billion range, behind only the two giants.
History: Nine Lives of the Original DeFi Protocol
MakerDAO was DeFi before the word DeFi existed. Single-collateral DAI launched in 2017, backed purely by ETH, and multi-collateral DAI followed in 2019. When DeFi summer arrived in 2020, DAI sat at the center of it. The farming pairs, the lending markets, the money legos: all of it ran on Maker’s stablecoin. We farmed through that era ourselves, and DAI was simply the water everything swam in.
Survival came with scars. On Black Thursday in March 2020, ETH crashed 50% in a day, liquidation auctions broke, and some collateral sold for zero bids. Millions in bad debt resulted, which MKR holders covered through emergency auctions. The system bent badly and did not break. In March 2023, DAI wobbled alongside USDC during the SVB weekend, because by then a large chunk of DAI’s backing was USDC itself. We covered that irony in our USDC review: the decentralized stablecoin depegged because of a centralized bank.
That dependency tells the real story of DAI’s evolution. To scale and to earn yield, MakerDAO steadily swapped crypto purity for USDC reserves and real-world assets like Treasury bills. Today, over 60% of the protocol’s revenue comes from RWAs. The decentralized stablecoin became, in large part, a DAO-governed wrapper around TradFi collateral.
Then came the rebrand. In August 2024, founder Rune Christensen launched his “Endgame” plan: MakerDAO became Sky, DAI upgraded to USDS, and MKR converted to SKY at 1:24,000. The community fought over it, and a governance vote kept the new branding with 79% support. By April and May 2026, the big exchanges force-converted DAI balances to USDS. This month, the migration officially completed.
Key Features
Overcollateralized minting. DAI and USDS mint against locked collateral worth more than the debt: ETH, staked ETH, wrapped BTC, plus a stablecoin stack that includes USDC and Tether itself, alongside tokenized Treasuries. Yes, the decentralized dollar partly runs on the centralized ones. Overcollateralization is the buffer that has kept the peg alive through every crash.
The 1:1 converter. DAI and USDS swap both directions through a smart contract at exactly 1:1, no fee, no slippage. Nobody holding DAI gets rugged by the rebrand; the exit is built in.
Native yield via the Sky Savings Rate. Deposit USDS and receive sUSDS, which compounds a variable rate of roughly 3.75% to 4.5% APY through 2026. Unlike Circle and Tether, this protocol shares the Treasury yield with holders, and that difference matters.
Battle-tested transparency. Every unit of collateral sits on-chain, visible in real time. No attestation PDF required; the dashboard is the audit.
Censorship-resistant core, with an asterisk. The vault system itself has no freeze function. The USDC and RWA collateral underneath absolutely does, which is the asterisk purists cannot forgive.
Fees
Minting DAI or USDS through vaults costs a stability fee, effectively an interest rate on your loan, which varies by collateral type. Regular users skip all that and just buy on exchanges at market price.
Holding costs nothing, converting DAI to USDS costs nothing, and the savings rate pays you rather than charging you. Add normal network gas and exchange spreads, and that is the whole fee picture. For yield-seeking holders, this is the cheapest seat in the stablecoin game.
Security and Reserves
DAI’s security record is the strongest argument for it. Nine years, multiple 50%-plus market crashes, a banking crisis, one messy rebrand: the system never lost user funds to a protocol failure. Overcollateralization plus liquidations plus emergency governance has handled everything the market threw at it.
Regulation treats this design differently too. Overcollateralized crypto-backed tokens like USDS sit outside the GENIUS Act regime built for 1:1 fiat stablecoins, which spares Sky the licensing fight Tether and Circle face, while leaving holders without that federal safety net.
The risk profile changed shape over the years, though. Smart contract risk remains, as it does for all DeFi. Governance risk grew as decisions concentrated around large SKY holders. And collateral risk now looks more like TradFi risk: USDC exposure, Treasury custodians, and RWA counterparties sit under the hood. When you hold USDS, you hold a slice of that whole stack.
Scam-wise, the migration period is prime hunting season. Fake “DAI to USDS migration” sites, phishing converters, and urgency scams telling you DAI expires worthless are circulating. The real converter has no deadline and no fee, and DAI remains redeemable 1:1 indefinitely. Anyone rushing you is robbing you.
The Slow Goodbye
Here is our honest read after watching this protocol since the early days. DAI won its war and lost its identity doing it.
The original dream was a dollar with no company, no bank, and no permission required. That dream ran into a hard truth: pure crypto collateral cannot scale a stablecoin into the tens of billions without brutal capital inefficiency. Every step MakerDAO took toward scale worked commercially and diluted the ideal: adding USDC, buying Treasuries, courting institutions. The rebrand to Sky and USDS just made the transformation official: a slick, yield-bearing, RWA-powered savings product wearing the governance clothes of the old revolution.
Is that bad? Commercially, no. USDS pays holders real yield, the peg is solid, and the protocol prints revenue. Philosophically, the torch of fully decentralized stablecoins has passed to smaller, purer experiments, while Sky competes in the regulated-adjacent big leagues. We respect the pragmatism and still miss the old religion a little.
For farmers, the practical takeaway: Sky’s ecosystem, including the Spark protocol, has a long record of rewarding early users, and incentive programs around USDS liquidity keep appearing. The old Maker never airdropped; the new Sky structure ships tokens. Position accordingly.
Pros and Cons
Pros
- Longest track record of any decentralized stablecoin, running since 2017
- Survived Black Thursday, the SVB weekend, and every major crash without losing user funds
- Real-time on-chain transparency instead of monthly PDFs
- Sky Savings Rate shares yield with holders, unlike USDT, USDC, and USD1
- Free, unlimited 1:1 conversion between DAI and USDS
- No freeze function at the protocol level
Cons
- Heavy USDC and RWA backing undercuts the decentralization pitch
- Rebrand confusion: two stablecoins and two governance tokens in one ecosystem
- Exchanges are actively retiring DAI support in favor of USDS
- Governance concentration among large SKY holders
- Smart contract risk that fiat-backed rivals do not carry
Who Should Use DAI (or USDS)
DeFi natives should simply hold USDS going forward. It is the canonical token now, the savings rate lives there, and DAI support keeps shrinking at the exchange level.
Yield seekers get the best passive stablecoin deal in this series here. Roughly 4% on sUSDS with no lockup beats the zero that USDT, USDC, and USD1 pay, in exchange for smart contract and governance risk.
Decentralization believers should size positions with clear eyes. The protocol layer resists censorship; the collateral layer does not. If your threat model is a government freezing assets, USDS is only partially the hedge you want.
Anyone still holding old DAI has no emergency, despite what scammers claim. Convert to USDS whenever convenient through the official Sky app, and ignore anyone selling urgency.
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Final Words
DAI is the stablecoin that proved the concept: a dollar built from code and collateral, tested by nine years of chaos, never bailed out and never broken. Its reward for winning was to outgrow its own ideology, rebrand into USDS, and settle into life as DeFi’s yield-bearing workhorse under the Sky banner.
We rate the system highly and the nostalgia even higher. For the opposite end of the spectrum, a brand-new stablecoin powered by politics instead of protocols, read our USD1 review next.
FAQ
Is DAI being discontinued?
No. DAI remains live and converts 1:1 to USDS both ways through Sky’s official converter, with no fee and no deadline. Exchanges are gradually shifting support to USDS, but old DAI does not expire.
What is the difference between DAI and USDS?
Same collateral pool, same peg, different wrapper. USDS is the upgraded 2024 token with access to the Sky Savings Rate, while DAI is the original 2017 token continuing in legacy positions.
Is DAI actually decentralized?
The vault and governance layer runs without central control, but a large share of the collateral is USDC and real-world assets that centralized parties can freeze. Call it decentralized machinery running on partially centralized fuel.
Does USDS pay yield?
Yes. Depositing USDS into the Sky Savings Rate mints sUSDS, which has compounded roughly 3.75% to 4.5% APY through 2026, funded largely by Treasury returns on protocol reserves.
What happened to MakerDAO and MKR?
MakerDAO rebranded to Sky in August 2024 under the Endgame plan. MKR converts to SKY at a 1:24,000 ratio, and SKY now handles governance for the whole ecosystem.
Has DAI ever depegged?
Briefly. DAI traded below peg during the March 2023 SVB weekend because of its USDC backing, and endured stress on Black Thursday in 2020. Both times the system recovered without user losses at the protocol level.
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