The Original Dai Stablecoin Launched
MakerDAO introduced the original Dai system, allowing users to generate a dollar-targeting stablecoin by depositing ETH as collateral.
USDS STABLECOIN EXPLAINED
About USDS
USDS is a collateral-backed stablecoin issued through Sky Protocol and designed to maintain a value close to $1.00. It launched as an upgraded version of DAI, although both assets continue to exist as separate tokens.
This page explains what the USDS stablecoin is, when it was created and how its collateral, issuance and peg mechanisms work.
USDS PROFILE
USDS at a Glance
USDS combines the stablecoin infrastructure developed by MakerDAO with the governance, savings and liquidity products of Sky Protocol. Here is a quick overview of its origins, purpose and underlying infrastructure.
UNDERSTANDING USDS
December 2017
November 2019
September 2024
December 2025
USDS Evolution
USDS launched on September 18, 2024, as part of MakerDAO’s transition to Sky Protocol. Its underlying stablecoin system developed from DAI, which had operated through MakerDAO since 2017.
USDS did not replace DAI immediately. The two remain separate tokens, with a protocol converter allowing users to exchange DAI and USDS at a fixed 1:1 ratio. This conversion rate does not guarantee that USDS will always trade at exactly $1.00 on external markets.
Multi-Collateral Dai Expanded the System
Multi-Collateral Dai introduced support for additional approved collateral types and established the broader infrastructure later inherited by USDS.
Sky Protocol Launched USDS
MakerDAO transitioned to Sky and introduced USDS as the upgraded version of DAI. A converter allowed users to exchange DAI and USDS at a fixed 1:1 ratio.
USDS Became the Third-Largest Stablecoin
USDS expanded significantly during 2025, reaching about $9 billion in supply and establishing itself as the third-largest stablecoin by market capitalization.
UNDERSTANDING USDS
How Does USDS Work?
USDS is issued through Sky Protocol against approved collateral and is designed to trade close to $1.00. Protocol rules govern collateral requirements, issuance and liquidation, while market activity determines the price available on exchanges.
USDS can also be obtained by converting DAI at a fixed 1:1 ratio through the protocol. Holding USDS alone does not generate the Sky Savings Rate. Users must supply it to a separate savings product, such as sUSDS, where available.
01 DEPOSIT OR CONVERT
Obtain USDS
Users can obtain USDS through supported protocol operations, convert DAI into USDS, or purchase it on an available market.
02 ISSUE THE STABLECOIN
Create USDS Against Supported Value
Sky Protocol issues USDS through approved mechanisms backed by collateral and other assets held within the wider stablecoin system.
03 SUPPORT THE PEG
Keep USDS Close to $1
Collateral requirements, liquidations, protocol conversion facilities and market activity work together to support the $1 target.
04 TRANSFER OR USE
Use USDS Across Supported Applications
USDS can be held, transferred, traded or supplied to supported DeFi products. Accessing the Sky Savings Rate requires a separate savings token rather than simply holding USDS.
What Shapes the USDS Price?
The USDS price is intended to remain close to $1.00, but its market value is determined by buying and selling across exchanges and decentralized markets. Changes in liquidity and demand can cause USDS to trade slightly above or below its target.
Sky Protocol supports the target through collateral requirements, liquidations and conversion mechanisms connecting USDS with other assets in the protocol. These mechanisms can help reduce price differences, but they do not guarantee that USDS will always trade at exactly $1.00.
Protocol Collateral
USDS is supported by collateral managed through Sky Protocol. The value, composition and risk of this collateral affect the system’s ability to support the stablecoin supply.
Conversion Mechanisms
Protocol facilities allow supported assets, including DAI, to be converted into USDS under defined conditions. These conversions can create opportunities to reduce differences between the market price and the $1 target.
Market Demand
Increased demand can push USDS above $1.00 when buyers are willing to pay a premium. Increased selling can move the price below the target when available supply exceeds immediate demand.
Trading Volume and Liquidity
Markets with deeper liquidity can process larger trades with less price movement. Limited liquidity or fragmented trading activity can produce larger differences between venues.
Protocol Governance
SKY token holders can approve changes affecting collateral, fees, savings products and other protocol parameters. These decisions can influence demand for USDS and the risks supporting its supply.
Regulation and Market Access
Regulatory decisions, exchange listings and blockchain integrations can affect where USDS is available and how easily users can trade, transfer or use it.
What Is the Price of USDS Today?
USDS is currently priced at 1.0011 USD, placing it above its $1.00 target by 0.11%. The live snapshot above shows the USDS current price, peg status, market capitalization, trading volume and circulating supply.
Why Is USDS Below $1?
USDS can trade below $1.00 when selling pressure exceeds immediate demand. Reduced liquidity, wider market stress, concerns about protocol collateral or differences between trading venues can contribute to a temporary discount.
The cause can vary between periods and markets. Current peg deviation, trading volume, liquidity and collateral data provide more context than the price alone.
Why Is USDS Above $1?
USDS can trade above $1.00 when demand exceeds the supply immediately available on a market. A premium may also appear when liquidity is limited or when prices differ between exchanges and decentralized trading venues.
Trading above the target is still a peg deviation. It should not automatically be treated as positive performance.
Will USDS Return to $1?
USDS is designed to move toward its $1.00 target through market activity and Sky Protocol’s peg-supporting mechanisms. These systems may encourage traders and users to respond when the market price moves away from the target.
A return to $1.00 cannot be guaranteed. The outcome depends on available liquidity, market confidence, collateral conditions and the continued operation of the protocol’s conversion mechanisms.
Is USDS Safe?
USDS is backed by collateral managed through Sky Protocol, but holding it still involves risk. These risks include changes in collateral value, smart-contract failures, governance decisions, market illiquidity and the possibility that USDS trades away from its target.
Users should review current collateral coverage, peg performance, protocol documentation and market liquidity before deciding whether USDS suits their needs.
How Can You Use or Sell the USDS Stablecoin?
USDS can be held in a compatible wallet, traded on supported markets or used across decentralized-finance applications. Eligible users can also supply USDS to Sky Savings to receive sUSDS and access the variable Sky Savings Rate.
Selling USDS usually means trading it for another cryptocurrency or fiat currency through a supported service. Available markets, networks, fees and withdrawal methods vary by platform and location, so these details should be checked before transferring funds.
Choose a Supported Service
Select a wallet, exchange or application that supports USDS on your chosen blockchain network. Check availability, fees and any account or access requirements before proceeding.
Confirm the Token and Network
Make sure the asset is USDS and that the sending and receiving networks match. USDS, DAI, sUSDS and wrapped versions should not be treated as interchangeable.
Use or Trade the USDS
Transfer USDS to the selected service to hold, convert, supply or sell it. Before confirming, review the quoted price, liquidity, fees and any slippage or conversion terms.
Complete the Transaction
Verify the address, network and amount before sending USDS. If you are selling for fiat or another asset, review the provider’s withdrawal steps, limits and transaction records.
CASH-OUT CHECKLIST
Before You Cash Out USDS
Before you cash out USDS, compare the service’s availability, supported networks, quoted price, total fees and expected processing time. These details affect how much money you receive and whether the withdrawal can be completed in your location.
Confirm the token, wallet address and transfer network before sending USDS, and keep records of the sale, fees and funds received. Blockchain transfers generally cannot be reversed once confirmed.
Service and Verification
Provider Availability
Confirm that the service operates in your jurisdiction, supports USDS and offers your preferred withdrawal method.
Identity Checks
Review the identification, account-verification and withdrawal requirements before transferring USDS.
Price and Costs
Peg Deviation and Liquidity
Compare the quoted USDS price with the $1.00 target and check whether the market has enough liquidity for the amount being sold.
Total Costs and Timing
Compare trading, conversion, network and withdrawal fees, along with withdrawal limits and expected processing times.
Transfer and Records
Token, Wallet, and Network
Verify that the receiving service supports USDS on the selected network. If the funds are held as sUSDS or stUSDS, convert them into USDS through the supported process first.
Transaction Records
Keep records of the sale, transfer, exchange rate, fees and funds received.
Disclaimer Selling, exchanging or converting USDS may create tax-reporting obligations. The applicable treatment depends on the transaction, jurisdiction and individual circumstances.