KoinlyticsMakerDAO launched DAI in 2017. It was the first crypto-collateralized stablecoin, the first live decentralized governance, and the model that most DeFi lending descended from. In 2024, Maker rebranded to Sky, launching USDS as DAI's next-gen sibling.
How DAI gets minted
You lock collateral (ETH, wBTC, stETH, USDC via PSM) in a vault. You mint DAI up to a collateral-specific LTV. You pay a stability fee (interest) on the minted DAI. When you repay the DAI plus fee, you get your collateral back. If your vault's collateral drops below liquidation ratio, keepers auction your collateral to cover the debt.
Why DAI stays near $1
- Stability fee. Raise it, borrowers repay, DAI supply shrinks, price rises.
- DSR (DAI Savings Rate). Pay holders to lock DAI, reducing float, supporting price.
- PSM (Peg Stability Module). Instant swap 1 USDC for 1 DAI. Hard-pegs by arbitrage.
The RWA turn
Since 2022, Maker has aggressively backed DAI with real-world assets: US treasuries, private credit, tokenized bonds. Roughly half of DAI's collateral is now off-chain assets managed by legal SPVs. This is what lets Maker offer 5-8% DSR while running a profit.
The Sky rebrand and USDS
USDS is basically DAI 2.0. Same $1 peg, same collateral logic, but with an on/off freeze switch (permissioned addresses for regulatory alignment). Holders can migrate 1:1 between DAI and USDS. SKY replaces MKR as the governance token at a 1:24k ratio.
Why the freeze switch matters
USDS is designed to comply with future regulation (US, EU) requiring stablecoins to have sanctions enforcement. DAI stays as the fully-permissionless version. The bet: some users want compliance, others want censorship resistance, both live on the same rails.
Practical takeaway
DAI/USDS remains the most credibly-neutral stablecoin. Its risk profile has shifted from "ETH liquidation risk" to "US Treasury duration + counterparty risk on RWA custodians." Read the collateral mix before you assume it is still 2018 DAI.