Is MakerDAO Safe?
Risk Grade: B (27/100)
MakerDAO is rated as moderate risk — some novel mechanisms, generally well-understood.
Moderate risk — counterparty exposure from RWA collateral and governance concentration, balanced by 7+ years of operation, Liquidations 2.0 improvements, and dominant stablecoin market position.
MakerDAO (rebranding to Sky) is the original decentralized stablecoin protocol, issuing DAI/USDS against overcollateralized crypto and real-world asset collateral. With approximately $5.5 billion in TVL and $338 million in annual revenue (2025), it is one of DeFi's most established and revenue-generating protocols, operating since late 2017. Its B grade reflects the battle-tested CDP model with a clean post-Liquidations 2.0 track record, offset by material counterparty risk from RWA collateral, governance concentration, and the complexity of the ongoing Sky/Endgame transition.
TVL
$5.5B
Mechanisms
8
Interactions
6
Value Grade
B
Key Risks for MakerDAO Users
The protocol relies on oracle price feeds with a deliberate 1-hour delay (Oracle Security Module) to trigger liquidations. During extreme market crashes with network congestion, this delay can cause liquidations to fail, as demonstrated during Black Thursday in March 2020 when $8.3 million was lost to zero-bid auctions. The system has since been rebuilt with Dutch auction liquidations and Chainlink backstops.
A growing portion of DAI/USDS backing comes from real-world assets (US Treasuries, institutional loans) and centralized stablecoins like USDC. If a major custodian fails or is subject to regulatory action, this collateral could become illiquid. The USDC depeg during the SVB crisis in March 2023 demonstrated this correlation risk.
Governance voting power is concentrated among a small number of large MKR/SKY holders. A recent vote on the Sky rebranding showed only four entities accounting for most votes. This concentration means critical protocol parameters (interest rates, collateral types, debt ceilings) are effectively controlled by a few parties.
The ongoing migration from MakerDAO to Sky — including token swaps (MKR to SKY at 1:24,000) and stablecoin upgrades (DAI to USDS) — creates transition complexity. Users who do not migrate may face reduced liquidity or feature access, and the migration contracts themselves represent temporary additional smart contract risk.
Top Risk Factors
- •Oracle-dependent liquidation system: Maker relies on a custom oracle module (Medianizer/OSM with 1-hour delay) feeding ETH and other collateral prices. During Black Thursday (March 2020), oracle lag combined with network congestion led to $8.3M in zero-bid liquidation auctions. The system has since been rebuilt with Liquidations 2.0 (Dutch auction format) and Chainlink integration, substantially mitigating but not eliminating oracle-related liquidation risk.
- •RWA and centralized collateral exposure: A significant portion of DAI/USDS backing now comes from real-world assets (US Treasuries, institutional loans) and centralized stablecoins (USDC). This introduces counterparty risk with regulated custodians and potential jurisdictional shutdown risk, though it also provides stability and revenue diversification.
- •Governance concentration risk: The MKR/SKY governance token has high insider allocation (~70% to founders/project at genesis), and recent rebranding votes showed only four entities accounting for most voting power. This concentration could enable parameter changes that disadvantage minority holders or DAI/USDS users.
- •Endgame complexity and migration risk: The ongoing Sky rebrand and Endgame restructuring introduces SubDAO complexity, token migration (MKR to SKY at 1:24,000), and new stablecoin mechanics (USDS). Migration risk and user confusion during the transition period could fragment liquidity or create arbitrage edge cases.
Risk Score Breakdown
MakerDAO's highest risk area is Scale Exposure (9/10). Here's how each dimension contributes to the overall 27/100 score:
Read the Full MakerDAO Risk Report
This protocol has 2 collapse scenarios. 2 high-severity interaction risks identified. See the full mechanism classification, interaction matrix, and deep-dive recommendations.
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