Explain MakerDAO in a one-pager

# MakerDAO: Decentralized Stablecoin Protocol ## TL;DR MakerDAO (now Sky Protocol) is Ethereum's pioneering decentralized lending protocol that enables users to generate the DAI stablecoin by depositing crypto collateral into overcollateralized vaults. Founded in 2015, it manages over $10 billion in debt across 10+ billion USDS/DAI tokens, operating as DeFi's de facto "central bank" through community governance and algorithmic stability mechanisms. ## What It Is **MakerDAO** is a decentralized autonomous organization founded in March 2015 by Rune Christensen, enabling permissionless, collateral-backed lending on Ethereum. The protocol allows users to lock cryptocurrency assets into smart contract vaults to borrow the DAI stablecoin—a decentralized, USD-pegged digital currency—without intermediaries or credit checks. **Core Innovation**: Created DeFi's first decentralized stablecoin through overcollateralization and algorithmic mechanisms rather than centralized reserves. ## How It Works: Vaults & Collateralization Users deposit crypto assets (ETH, WBTC, stablecoins, real-world assets) into **vaults** (formerly called Collateralized Debt Positions or CDPs) to mint/borrow DAI: 1. **Overcollateralization**: Deposit collateral worth >100% of DAI borrowed (e.g., $150 ETH to mint 100 DAI) 2. **Stability Fees**: Continuous interest accrues on borrowed DAI, paid when closing vaults 3. **Liquidation Risk**: If collateral value drops below minimum ratio, automated auctions sell collateral to cover debt 4. **Debt Repayment**: Users repay DAI + fees to withdraw collateral; repaid DAI is burned **Current Collateral Distribution** (as of January 2026): - **Crypto Vaults**: $664M (ETH, WBTC, staked ETH) - **Stablecoin PSM**: $3.38B (USDC/GUSD swaps for instant liquidity) - **Real-World Assets (RWA)**: $99M (tokenized securities, bonds) - **Star Vaults**: $5.57B (subDAO allocations for specialized operations) ## Key Tokens ### DAI Stablecoin - **Purpose**: Decentralized, overcollateralized stablecoin soft-pegged to $1 USD - **Supply**: 10+ billion combined DAI/USDS tokens in circulation (January 2026) - **Use Cases**: Borrowing, lending, savings (via DAI Savings Rate), DeFi liquidity base layer - **Stability**: Maintained through arbitrage opportunities, liquidation auctions, and MKR backstop ### MKR Governance Token - **Role**: Governance voting on protocol parameters (collateral types, stability fees, risk settings) - **Backstop Mechanism**: Minted and auctioned to cover protocol deficits; burned when surplus exists - **Conversion**: Legacy token upgradeable to SKY at 24,000:1 ratio post-rebrand ## Governance Model MKR holders control protocol through **on-chain voting**: - Vote on executive proposals for parameter changes, collateral additions, risk frameworks - Community discussions on forums; delegation supported for voting power concentration - Emergency shutdown mechanism exists for catastrophic scenarios - Transitioning to SKY governance with staking rewards incentivizing active participation ## Current Metrics (January 2026) | Metric | Value | |--------|-------| | **Total Debt Outstanding** | $10.57B (USDS/DAI) | | **Total Value Locked** | ~$10B collateral | | **Annualized Revenue** | $148.79M | | **30-Day Revenue** | $12.2M | | **Holders' Annualized Revenue** | $100.26M | | **Cumulative Revenue** | $507.69M | **Primary Chain**: Ethereum (95%+ activity), with bridged positions on Arbitrum, Base, Solana ## Evolution to Sky Protocol (2024-2026) MakerDAO rebranded to **Sky Protocol** as part of the "Endgame" roadmap: ### New Features - **USDS**: Upgradeable, yield-bearing stablecoin with Sky Savings Rate (SSR) rewards - **SKY Token**: Governance token replacing MKR with staking incentives and planned deflationary mechanics - **Sky Stars**: Semi-independent subDAOs for specialized operations (e.g., Spark for lending) - **Enhanced Integrations**: Multichain expansion via Wormhole NTT, Aave collaborations, custom SkyLink bridge ### Legacy Support - DAI and MKR remain functional for users preferring original tokens - Gradual migration encouraged through yield incentives and platform integrations ### Community Reception Mixed reactions: innovation praised for native rewards and scalability, but concerns raised about brand dilution and governance centralization. Recent vote affirmed keeping Sky brand despite debates. --- **Bottom Line**: MakerDAO pioneered decentralized stablecoin infrastructure, evolving from single-collateral DAI (2017) to a $10B+ multi-collateral ecosystem managing real-world assets, crypto, and stablecoins. The Sky Protocol rebrand aims to scale through yield-bearing products, multichain deployment, and subDAO specialization while maintaining its role as DeFi's foundational liquidity layer.