MakerDAO (Sky) Review 2026
MakerDAO (now Sky) allows users to mint DAI/USDS stablecoin against crypto collateral through Maker Vaults, the original DeFi lending mechanism.
Last updated: 2026-02-27 · Independently reviewed
Key Details
MakerDAO (Sky) Ratings Breakdown
What Is MakerDAO (Sky)?
MakerDAO — now rebranded as Sky Protocol — is the original DeFi lending mechanism and one of the most important protocols in crypto history. Founded in 2017, it pioneered the concept of minting decentralized stablecoins against crypto collateral. Instead of borrowing from a lending pool like Aave or Compound, MakerDAO lets you open a "Vault," deposit collateral (ETH, WBTC, or wstETH), and mint DAI or USDS stablecoins directly. The protocol oversees over $7.8 billion in stablecoin liabilities and remains the backbone of DeFi stablecoin infrastructure. In August 2024, MakerDAO officially rebranded to Sky, introducing new tokens (USDS stablecoin and SKY governance token) while keeping DAI and MKR in circulation.
How MakerDAO (Sky) Loans Work
MakerDAO uses "Vaults" (previously called CDPs — Collateralized Debt Positions). You deposit crypto collateral into a smart contract vault and mint DAI or USDS stablecoins against it. This is fundamentally different from borrowing — you're creating new stablecoins rather than borrowing from a pool. The maximum amount you can mint depends on your collateral type and its liquidation ratio (typically requiring 150–175% collateralization, or roughly 57–66% LTV). Instead of interest rates, you pay a "stability fee" — an annual percentage charged on your minted stablecoins. If your collateral value drops below the liquidation ratio, your vault gets liquidated with a 13% penalty. The Spark protocol (the first "Sky Star" sub-protocol) now serves as the primary lending frontend for interacting with Sky/Maker vaults, with over $3 billion in TVL.
MakerDAO (Sky) Interest Rates
MakerDAO charges "stability fees" rather than traditional interest rates. These fees range from 4% to 8% annually, depending on the collateral type and vault configuration. ETH-A vaults typically carry 4–5% fees, while WBTC vaults may be slightly higher. These fees are set by MKR/SKY governance rather than by algorithmic supply-demand dynamics, which makes them more predictable than Aave or Compound's variable rates. The Sky Savings Rate (SSR) lets USDS holders earn yield funded by protocol revenue — essentially passing some of the stability fee income back to stablecoin holders.
Security & Safety
MakerDAO has the longest operational track record of any DeFi lending protocol, running since 2017 through multiple market crashes including the "Black Thursday" event of March 2020 and the 2022 crypto winter. The smart contracts have been extensively audited and battle-tested with real value at risk. The protocol manages $7.8 billion in stablecoin liabilities and has maintained the DAI peg through extreme market conditions. However, the 13% liquidation penalty is one of the harshest in DeFi — if your vault is liquidated, you lose significantly more than on Aave (which charges 5–10% liquidation bonuses). Vault management requires active monitoring, and the complexity of the system (different vault types, stability fees, liquidation ratios) creates a learning curve.
Pros and Cons
Pros
- Original DeFi lending protocol — longest track record
- Mint your own stablecoin (DAI/USDS)
- Competitive stability fees
- Deep liquidity and integrations
- Battle-tested smart contracts
Cons
- Complex vault management for beginners
- Liquidation penalty (13%)
- Rebranding confusion (MakerDAO → Sky)
- Ethereum mainnet gas costs
- No customer support
Who Is MakerDAO (Sky) Best For?
MakerDAO/Sky is best for users who want to mint their own stablecoins rather than borrow from a pool. It's ideal for long-term DeFi users who understand vault mechanics and want predictable, governance-set stability fees rather than volatile algorithmic rates. The protocol is also valuable if you need DAI specifically, as it's deeply integrated across DeFi. It's less suitable for beginners (the vault system is complex), users who might get liquidated (the 13% penalty is severe), or those confused by the ongoing Sky rebrand.
MakerDAO (Sky) vs Alternatives
Final Verdict
MakerDAO/Sky earns a 8/10 in our review. It's the founding protocol of DeFi lending with an unmatched track record and the deepest stablecoin integration in the ecosystem. The stability fee model offers more predictable costs than variable-rate protocols, and the Spark frontend has modernized the user experience significantly. Points are deducted for the harsh 13% liquidation penalty, the complexity of vault management, the confusing Sky rebrand (which the community itself is divided on), and Ethereum-only deployment. For experienced DeFi users who want to mint stablecoins with predictable fees, MakerDAO remains the gold standard — even if it now calls itself Sky.
Frequently Asked Questions
What is the difference between MakerDAO and Sky?
Sky is the new name for MakerDAO following an August 2024 rebrand. The protocol introduced new tokens: USDS (replacing DAI) and SKY (replacing MKR governance). However, DAI and MKR still exist and remain in circulation — token holders can optionally convert 1:1 (DAI to USDS) or 1:24,000 (MKR to SKY). The underlying vault mechanics remain the same.
What is MakerDAO's liquidation penalty?
MakerDAO charges a 13% liquidation penalty — one of the highest in DeFi. If your vault's collateral ratio drops below the minimum threshold, your collateral is auctioned off and you lose 13% on top of the shortfall. This makes active vault management and conservative collateralization ratios especially important.
How is MakerDAO different from Aave?
The key difference is that MakerDAO lets you mint new stablecoins (DAI/USDS) against collateral, while Aave lets you borrow existing assets from lending pools. MakerDAO charges governance-set stability fees; Aave charges algorithmic variable rates. MakerDAO has a 13% liquidation penalty; Aave's is lower (5-10%). Aave supports more chains and assets; MakerDAO is Ethereum-focused with deeper stablecoin integration.
What is the Spark protocol?
Spark is the first "Sky Star" — an independent sub-protocol within the Sky ecosystem. It serves as the main lending frontend for interacting with Maker vaults, with over $3 billion in TVL. Think of Spark as the user-friendly interface layer on top of MakerDAO's vault infrastructure.
Is MakerDAO/Sky available in the US?
The smart contracts are permissionless and accessible globally. However, certain frontend interfaces may restrict US access due to regulatory concerns. You can always interact directly with the smart contracts via a Web3 wallet regardless of location.