This article introduces how Sky Protocol (formerly MakerDAO) uses decentralized smart contracts to manage the Dai and USDS stablecoins, analyzing its collateral lending architecture, stablecoin functions, and governance risk control, showcasing its core position and future development in the DeFi field.
Introduction to Sky Protocol and MakerDAO
Sky Protocol was formerly known as MakerDAO, and it is one of the earliest and most widely used decentralized finance (DeFi) applications on Ethereum. It generates and manages stablecoins through smart contracts, eliminating the need for centralized institutions and establishing a solid foundation for the stablecoin sector.
The operation of the Dai stablecoin
Dai is a decentralized over-collateralized stablecoin, with a target price fixed at 1 dollar. Users can mint equivalent Dai by collateralizing Ethereum or other governance-approved assets in the Vault of Sky Protocol. Since the value of the collateral always exceeds the Dai debt, it ensures the stability and reliability of Dai.
The currency functions and uses of Dai
Dai possesses four core functions of currency: value storage, medium of exchange, unit of account, and deferred payment. It can not only be used for payments and transfers but also supports programmatic interest earnings (Dai Savings Rate), making it an indispensable liquidity tool in the DeFi ecosystem.
The launch and features of the USDS stablecoin
In 2024, MakerDAO officially transitioned to Sky Protocol, launching a new stablecoin USDS. USDS emphasizes compliance expansion and intends to introduce a “freeze feature” to meet regulatory requirements. Dai and USDS can be freely exchanged through exchange contracts, providing users with more flexible options.
Sky Vaults and Risk Governance
Users can generate Dai by mortgaging assets through Vault, and retrieve the collateral after repaying the loan, ensuring the safety of funds. Sky Protocol uses the governance token MKR as the core of system security, allowing holders to vote on adjusting collateral parameters and risk mechanisms, and there are liquidation and auction processes in place to ensure system stability.
Summary
Sky Protocol constructs a decentralized and robust financial system through two major stablecoin products, Dai and USDS, combined with Vault, governance, and auction mechanisms.
* The information is not intended to be and does not constitute financial advice or any other recommendation of any sort offered or endorsed by Gate.
