Key Takeaways
- MakerDAO's rebranded Sky protocol has reached $12 billion in total value locked, a 58% increase since the rebrand launched
- USDS, the successor to DAI, has grown to $6.8 billion in circulation with 62% of DAI holders completing the upgrade
- The Spark lending platform accounts for $3.4 billion of the protocol's TVL growth
- Real-world asset (RWA) allocations generate 40% of Sky's annual revenue, totaling approximately $180 million
- The SKY governance token has appreciated 85% since the September 2024 rebrand
Sky Protocol Reaches $12 Billion TVL
Sky, the protocol formerly known as MakerDAO, has crossed $12 billion in total value locked as of March 25, 2026. The milestone represents a 58% increase from the $7.6 billion TVL recorded when the rebrand officially launched in September 2024, making Sky the third-largest DeFi protocol behind Lido and Aave.
The growth contradicts early skepticism about the rebrand, which drew criticism from parts of the DeFi community who saw it as unnecessary complexity layered onto a protocol that already worked. Rune Christensen, Sky's co-founder, responded to the milestone by posting on Farcaster that the rebrand was "never about the name" but about restructuring the protocol's governance and economics for long-term sustainability.
Sky's TVL breaks down into three main categories: $6.8 billion in USDS stablecoin collateral vaults, $3.4 billion in the Spark lending platform, and $1.8 billion in the Sky Savings Rate module where users earn yield on deposited USDS. The combined DAI and USDS supply now exceeds $9.2 billion, making it the largest decentralized stablecoin by a wide margin.
USDS Stablecoin Gains Ground on DAI
USDS, the upgraded version of DAI, has reached $6.8 billion in circulation. Approximately 62% of former DAI holders have converted their tokens to USDS, attracted by the enhanced savings rate and governance features. The conversion is optional and occurs at a 1:1 ratio, with DAI remaining fully supported indefinitely.
The Sky Savings Rate (SSR), currently set at 8.5% APY, has been the primary driver of USDS adoption. This rate, funded by the protocol's lending revenue and RWA yields, significantly exceeds the 5% DSR (DAI Savings Rate) that was available before the rebrand. Over $1.8 billion in USDS is currently deposited in the SSR contract, generating consistent demand for the stablecoin.
USDS has also expanded its presence across DeFi protocols. The stablecoin is now listed on Aave, Compound, and Morpho as a borrowable and collateral asset. Several centralized exchanges, including Coinbase and Kraken, have added USDS trading pairs, increasing its accessibility to users who may not interact directly with the Sky protocol.
Spark Lending Platform Fuels Growth
Spark, Sky's dedicated lending platform that launched as a SubDAO in 2024, has emerged as a significant DeFi lending venue in its own right. With $3.4 billion in TVL, Spark ranks among the top ten lending protocols across all of DeFi.
The platform operates similarly to Aave, allowing users to deposit crypto assets as collateral and borrow against them. Spark's primary advantage is its deep integration with the Sky ecosystem. Users can borrow USDS at rates that are typically 0.5-1% lower than comparable rates on Aave, because Spark sources its USDS liquidity directly from Sky's minting mechanism rather than from depositor pools.
Spark currently supports lending and borrowing for ETH, WBTC, stETH, and several other major tokens. Its utilization rate, the percentage of deposited assets that have been borrowed, averages 72%, indicating healthy demand for borrowing across its supported markets.
Real-World Assets Power Protocol Revenue
Sky's allocation to real-world assets has become the protocol's most reliable revenue engine. Approximately $3.2 billion of Sky's collateral is invested in tokenized US Treasury bills, structured credit, and other off-chain financial instruments through partnerships with asset managers like BlackRock, Monetalis, and Centrifuge.
| Revenue Source | Annual Revenue | Share of Total |
|---|---|---|
| Real-World Assets (RWAs) | $180M | 40% |
| Crypto Vault Stability Fees | $145M | 32% |
| Spark Lending Fees | $78M | 17% |
| Liquidation Revenue | $47M | 11% |
The RWA portfolio generates approximately $180 million in annual revenue, representing 40% of Sky's total income. This revenue stream is relatively stable compared to the volatility-dependent income from crypto vault stability fees and liquidations. The Treasury bill allocations alone yield over $140 million annually at current interest rates.
The RWA strategy has drawn both praise and criticism. Supporters argue it diversifies the protocol's revenue and reduces dependence on crypto market conditions. Critics point out that allocating to off-chain assets introduces counterparty risk and moves the protocol further from the trustless ideal of pure on-chain DeFi.
SubDAO Structure Gains Traction
The Endgame Plan, MakerDAO's governance restructuring blueprint that motivated the Sky rebrand, proposed splitting protocol operations into specialized SubDAOs. Eighteen months in, two SubDAOs are fully operational and several more are in development.
Spark Protocol, the lending SubDAO, operates with its own governance token (SPK) and semi-independent decision-making authority. SparkDAO governs lending parameters, risk frameworks, and new asset listings within the Spark platform. This structure allows Spark to move faster than if every decision required full Sky governance approval.
The Sakura SubDAO manages Sky's Japanese market operations, including partnerships with local exchanges and compliance with Japan's crypto regulatory framework. Two additional SubDAOs focused on institutional onboarding and cross-chain expansion are expected to launch in Q2 2026.
The SKY governance token, which replaced MKR at a conversion ratio of 24,000 SKY per 1 MKR, has appreciated 85% since the rebrand. The token trades at approximately $0.09, giving it a fully diluted valuation of $5.4 billion. Revenue distribution to SKY stakers has contributed to the price performance, with an annualized yield of roughly 6.2% in protocol fees.
What This Means for DeFi
Sky's growth trajectory validates a model that other DeFi protocols are watching closely: combining on-chain lending with real-world asset exposure and modular governance. The protocol's ability to grow TVL by 58% during a period of moderate crypto market activity suggests that structural improvements, not just market momentum, can drive protocol adoption.
The success of the SubDAO model could influence how other large DeFi protocols organize themselves. Uniswap, Aave, and Compound have all discussed governance restructuring proposals in their forums, with some explicitly referencing Sky's Endgame framework as a potential template.
For the broader stablecoin market, USDS's growth adds a credible decentralized alternative at a time when regulatory scrutiny of centralized stablecoins like USDT and USDC continues to increase. If USDS maintains its current growth rate, it could surpass $10 billion in supply by year-end, establishing it as a foundational building block of DeFi infrastructure.
Frequently Asked Questions
What is Sky protocol?
Sky is the rebranded version of MakerDAO, one of the oldest and largest DeFi protocols. The rebrand, which launched in September 2024, introduced new tokens (SKY governance token and USDS stablecoin), a restructured governance model with SubDAOs, and the Spark lending platform. The underlying protocol mechanics remain similar to MakerDAO, with users depositing collateral to mint stablecoins.
What happened to DAI and MKR tokens?
DAI and MKR still exist and remain fully functional. Users can optionally upgrade DAI to USDS and MKR to SKY at fixed conversion rates. The original tokens continue to be supported indefinitely. As of March 2026, approximately 62% of DAI has been converted to USDS, while about 45% of MKR has been converted to SKY.
How does the Sky Savings Rate work?
The Sky Savings Rate (SSR) allows USDS holders to deposit their stablecoins and earn yield generated from the protocol's lending activities and real-world asset investments. The current SSR is 8.5%, paid in USDS. Unlike traditional savings accounts, the SSR is governed by SKY token holders who vote on rate adjustments based on protocol revenue and market conditions.
Is Sky protocol safe?
Sky inherits MakerDAO's track record, which includes over four years of operation without a major smart contract exploit. The protocol manages $12 billion in TVL and has survived multiple market crashes, including the March 2020 "Black Thursday" event. However, all DeFi protocols carry smart contract risk, oracle risk, and governance risk. The protocol's collateralization ratio remains above 150%, providing a buffer against market volatility.