What Is USDS? Sky's Stablecoin, sUSDS and the Savings Rate
USDS is Sky's upgraded DAI. How it is backed, 1:1 DAI conversion, sUSDS and the 3.80% Sky Savings Rate (9 Oct 2026), the SKY token and the risks.
USDS is the US dollar stablecoin of the Sky Protocol, the project formerly known as MakerDAO. It is the upgraded version of DAI: you can swap DAI for USDS, and back, at a fixed 1:1 rate with no fee. If you deposit USDS into the Sky Savings vault you receive sUSDS, which earned the Sky Savings Rate of 3.80% a year as of 9 October 2026, read directly from the sUSDS contract on Ethereum.
As of the same date, about 7.0 billion USDS existed on Ethereum, and roughly 4.9 billion of it sat inside sUSDS. This guide explains where USDS came from, how it is backed, how DAI and USDS conversion works, what the SKY token does, and the risks you take on by holding it.
What is USDS?
USDS (Sky Dollar) is an ERC-20 token on Ethereum that aims to stay worth $1. DefiLlama describes it as "soft-pegged to the U.S. dollar and backed by surplus collateral" on its USDS page. It is issued by the Sky Protocol, the same set of smart contracts that has issued DAI since 2017, now governed by holders of the SKY token.
A quick note on the name, because "USDS" is a crowded ticker. This article is about Sky's stablecoin. Sperax USD on Arbitrum also trades as USDs, and DefiLlama lists a few other small tokens with the same symbol. When you buy or bridge USDS, check the contract address: Sky's USDS on Ethereum is 0xdC035D45…7384F.
USDS sits in the "overcollateralised crypto stablecoin" family alongside DAI, rather than with cash-backed tokens like USDC. For the full map of stablecoin types, see our stablecoins explained guide.
From DAI to USDS: a short history
MakerDAO first issued DAI in 2017; Sky's own contract list still dates its first governance contract to that year. In 2024 the project rebranded as Sky and introduced two new tokens: USDS as the successor to DAI, and SKY as the successor to the MKR governance token. DefiLlama's supply data for USDS begins on 18 September 2024, with about 98.5 million tokens on day one.
The governance side followed in 2025. According to Sky's token governance upgrade timeline, the migration to SKY-based voting went live on 19 May 2025, and a "Delayed Upgrade Penalty" began on 18 September 2025: anyone converting MKR to SKY after that date pays a 1% penalty, rising by a further 1% every three months unless governance decides otherwise.
DAI did not disappear. Both tokens still exist and are issued from the same system. On 9 October 2026, the DAI contract on Ethereum showed a total supply of about 4.55 billion, against about 7.0 billion USDS on Ethereum. A year earlier, on 9 October 2025, DefiLlama put USDS circulation at $4.36 billion, and it peaked at $8.95 billion on 1 April 2026.
How USDS is created and backed
Like DAI, USDS is created when someone borrows it against collateral, or when stable assets are swapped into the system. Sky's developer docs say USDS "is linked to the same issuance source as DAI, ensuring that USDS maintains parity with DAI."
There are three main ways USDS enters circulation:
- Vaults. Users lock collateral such as ETH, wstETH or WBTC in a Sky vault and mint USDS against it, paying a stability fee. The vault must stay overcollateralised or it is liquidated. DefiLlama's Sky Lending entry showed $6.02 billion of collateral locked on 9 October 2026.
- The peg stability module. Sky's LitePSM lets anyone swap USDC for USDS (or DAI) and back at a fixed ratio, with fees set by governance. This is the main tool that holds the price near $1, and it means part of USDS is effectively backed by USDC.
- Capital allocation. Sky mints USDS into strategies run by ecosystem projects such as Spark. Spark's Spark Liquidity Layer receives USDS "via the Sky allocation system" and deploys it across DeFi, CeFi and traditional finance, within rate limits and use cases set by Sky governance.
The stability fees paid by borrowers and the income from these strategies fund the savings rate described below. If you want to understand why a peg module matters so much in practice, our stablecoin depegs explained post walks through what happens when the backing comes under pressure.
DAI to USDS conversion
The DAI–USDS converter is the simplest part of the system. According to the USDS token docs, it:
- converts DAI to USDS, and USDS to DAI, at a fixed 1:1 ratio;
- charges no fee; and
- cannot have fees enabled in the future.
In practice you can upgrade through the official app at sky.money, or through any wallet or aggregator that routes to the converter. You only pay Ethereum gas. Spark's swap guide also lets users move between USDS, DAI and USDC with no slippage under its current fee settings.
One detail trips people up: the savings versions are not interchangeable at 1:1. Sky's docs note that "sUSDS and sDAI are not exchangeable on a 1:1 basis, as they have different face values, and have accumulated varying amounts of yield since their respective launches." To move from sDAI to sUSDS you withdraw to DAI, convert to USDS, then deposit again.
sUSDS and the Sky Savings Rate
sUSDS is a vault token built on the ERC-4626 standard. You deposit USDS and receive sUSDS shares; the number of shares stays the same, but each share is redeemable for a growing amount of USDS as the Sky Savings Rate (SSR) accrues. The sUSDS docs say there are no fees on this route and fees cannot be added later.
The SSR is set by Sky governance, not by the market. The contract stores it as a per-second rate. Converting the value stored on 9 October 2026 gives 3.80% a year, which matches the sUSDS rate shown on DefiLlama Yields the same day. For comparison, the older DAI Savings Rate (used by sDAI) stood at 1.25%, so governance is clearly steering savers toward USDS.
| Token | What it is | Rate on 9 Oct 2026 | Size |
|---|---|---|---|
| USDS | Sky's dollar stablecoin | None (plain token) | ~7.0B on Ethereum |
| sUSDS | USDS in the savings vault | 3.80% SSR | ~4.9B USDS deposited |
| DAI | Legacy stablecoin, 1:1 with USDS | None (plain token) | ~4.55B supply |
| sDAI | DAI in the savings vault | 1.25% DSR | ~$201M on DefiLlama |
Two other kinds of USDS product exist. Reward farms let you supply USDS and earn another token instead of USDS interest; on 9 October 2026 DefiLlama listed a Sky farm paying rewards in GROVE. stUSDS, which the stUSDS docs call Sky's first "Expert" token, funds loans to SKY stakers and is "structured to absorb a greater share of system risk" in exchange for a higher potential return. Treat it as a riskier product, not a savings account.
What is the SKY token?
SKY is Sky's governance token. Holders vote on risk parameters, collateral types and the savings rate, and can stake SKY in the Staking Engine to earn rewards and delegate votes. It replaced MKR at a fixed ratio of 1 MKR = 24,000 SKY, according to the SKY token docs. Upgrades made after 18 September 2025 carry the delayed upgrade penalty described above.
SKY is not a stablecoin and its price moves freely. CoinGecko showed SKY at about $0.077, with a market capitalisation of roughly $1.8 billion, on 9 October 2026. Holding USDS or sUSDS does not require you to hold SKY.
Risks of holding USDS
USDS has a long lineage through DAI, but it is not risk-free. The main risks:
- Collateral and liquidation risk. Part of the backing is volatile crypto. A sharp crash combined with slow liquidations could leave the system short, which is why vaults are overcollateralised.
- USDC dependency. The peg module ties a share of USDS to USDC. If USDC lost its peg, USDS would feel the pressure too.
- Governance risk. SKY holders can change the savings rate, fees, collateral and even the LitePSM. The docs note governance can halt PSM swaps by setting fees to the maximum. The 3.80% SSR can be cut at any time.
- Upgradeable contracts. The USDS token uses an upgradeable proxy pattern, unlike the original DAI contract. That allows fixes, but it also means the token's code can change by governance vote.
- Bridge risk. USDS on chains other than Ethereum, such as Arbitrum and Base, is bridged. Bridged tokens add the bridge's own security assumptions.
- Smart contract risk. Every vault, converter and savings module is code. Read our checklist on how to check a DeFi protocol is safe before depositing anywhere.
On the regulatory side, USDS is not issued by a licensed payment stablecoin issuer, and no Sky entity appears on ESMA's register of e-money token issuers under the EU's MiCA rules (checked 9 October 2026). See our guides to the GENIUS Act and MiCA-compliant stablecoins for what that means.
USDS compared with other dollar stablecoins
USDS is built very differently from cash-backed stablecoins, but it competes with them for the same deposits. DefiLlama put total dollar stablecoins at about $311.6 billion on 9 October 2026, so USDS, at roughly $6.9 billion on DefiLlama's count, is a small slice. Its main selling point is the native savings rate: holding USDC or a GENIUS Act stablecoin such as PayPal USD or Ripple USD earns nothing from the issuer, while sUSDS pays the SSR on-chain. Ethena's USDe also pays a yield, but from futures funding rather than lending, which is a different risk.
JewelSwap does not issue or integrate USDS. Its stablecoin activity is on Sui, where a suiUSDT–USDC leveraged farm runs through the Scallop lending market.
Frequently asked questions
What is USDS crypto?
USDS is the dollar stablecoin of the Sky Protocol, formerly MakerDAO. It launched in September 2024 as the upgraded version of DAI, can be converted 1:1 with DAI at no cost, and is backed by overcollateralised crypto vaults, USDC in a peg stability module and other strategies.
Is USDS the same as DAI?
No, but they are closely linked. Both are issued by the same Sky system and a converter swaps them at a fixed 1:1 rate with no fee. USDS has the newer savings product, sUSDS, which paid 3.80% a year on 9 October 2026 against 1.25% for sDAI.
What is sUSDS?
sUSDS is an ERC-4626 vault token you receive when you deposit USDS into the Sky Savings vault. Each sUSDS share is redeemable for a growing amount of USDS as the Sky Savings Rate accrues. There are no deposit or withdrawal fees on the official route.
How do I convert DAI to USDS?
Use the DAI–USDS converter, through sky.money or a wallet or aggregator that routes to it. The rate is fixed at 1:1 in both directions, no protocol fee is charged, and Sky's docs say fees cannot be enabled on this route in future. You only pay network gas.
Is USDS safe?
USDS has a long track record through DAI, but it carries collateral, governance, smart contract and USDC-dependency risks, and the savings rate can change at any time. It is not issued under a US or EU stablecoin licence. Only hold what you can afford to have at risk.
Is USDS the same as Sperax USDs?
No. Sperax USD is a separate stablecoin on Arbitrum that also uses the USDs ticker. Sky's USDS on Ethereum has the contract address 0xdC035D45d973E3EC169d2276DDab16f1e407384F. Always check the address before buying.
Keep reading
- Stablecoins explained
- What is USDe? Ethena's synthetic dollar explained
- Stablecoin issuers in 2026
- What is PYUSD?
- Stablecoin depegs explained
This article is educational and isn't financial advice. Supply, savings-rate and contract figures were read from Ethereum on 9 October 2026; circulation history, TVL and yields are from DefiLlama and SKY's price from CoinGecko on the same date; token mechanics are from Sky's developer documentation. Rates and supply change constantly.
