Is sDAI Safe?
Risk Grade: B+ (19/100)
sDAI is rated as moderate risk — some novel mechanisms, generally well-understood.
Low risk — battle-tested MakerDAO savings product with no novel mechanics, but yield depends entirely on governance decisions and DAI peg stability backed increasingly by real-world assets
sDAI is the simplest way to earn yield on the DAI stablecoin. You deposit DAI into MakerDAO's savings module and receive sDAI, a token that automatically grows in value as interest accrues. Currently earning about 3.5% APY, funded by MakerDAO's revenue from lending and real-world assets like US Treasury bills. With ~$85M TVL, it is a well-established, low-complexity DeFi product.
TVL
$79M
Mechanisms
5
Interactions
4
Value Grade
D-
Key Risks for sDAI Users
The interest rate on sDAI is controlled by MakerDAO governance and can change at any time. It has been as high as 8% and as low as 0%. You have no guarantee of any specific yield
sDAI is only as safe as DAI itself. If DAI loses its peg due to problems with its collateral (over 50% is now real-world assets like Treasuries), your sDAI will be worth less than expected
If you use sDAI as collateral in lending protocols and DAI depegs, you could face liquidation even though sDAI is supposed to be a safe, yield-bearing asset
Top Risk Factors
- •sDAI yield is entirely dependent on the Dai Savings Rate (DSR) set by MakerDAO/Sky governance — rate changes directly affect user returns with no notice requirement
- •Underlying DAI stablecoin peg risk: if DAI depegs due to MakerDAO collateral failures, sDAI inherits the same loss
- •RWA-heavy backing of DAI introduces counterparty risk from off-chain custodians and traditional finance intermediaries
How sDAI Compares to Peers
sDAI ranks #2 of 116 Yield protocols (top quartile — safer than most). At a risk score of 19/100, it's 18 points safer than the sector average of 37/100.
Adjacent peers: Idle (B+, 16/100) is ranked just safer, and Spark Savings (B, 22/100) is ranked just riskier.
See the full Yield sector leaderboard or the sDAI vs Spark Savings comparison.
Common Questions about sDAI
Plain-English answers based on sDAI's scores across Hindenrank's 8 risk dimensions. The highest-scoring (riskiest) dimension is Vitality Risk (6/10).
Has sDAI ever been hacked or exploited?
sDAI has a fairly clean operational history. The track record dimension scored 3/15, indicating minor or no significant incidents on record. A clean track record is a positive signal but it does not guarantee future safety, especially as protocol complexity grows.
How much money is at stake in sDAI?
sDAI currently holds roughly $79M in user deposits. Smaller TVL means individual depositors carry a larger share of any loss event, and it can be harder to exit a position quickly during stress.
What's the worst-case scenario for sDAI?
Hindenrank has identified specific collapse scenarios for sDAI. The most prominent: "DAI Depeg via RWA Counterparty Failure". The trigger condition is A major RWA custodian holding a significant portion of DAI's backing (e.g., tokenized US Treasury provider) becomes insolvent or assets are frozen by regulators, causing DAI to lose its peg. Reading through the full scenario list on the protocol page is the single best way to understand the actual failure modes — generic "smart contract risk" is rarely the thing that takes a protocol down.
Is sDAI regulated or insured?
sDAI has low regulatory exposure on Hindenrank's framework (2/10). The protocol is structured in a way that minimizes counterparty and jurisdiction concentration, though regulatory risk in crypto can change rapidly. No DeFi protocol carries FDIC-style insurance — even with low regulatory risk, depositors are not protected in the way bank customers are.
What are the biggest red flags for sDAI?
Hindenrank's retail-focused risk audit flagged: The interest rate on sDAI is controlled by MakerDAO governance and can change at any time. It has been as high as 8% and as low as 0%. You have no guarantee of any specific yield sDAI is only as safe as DAI itself. If DAI loses its peg due to problems with its collateral (over 50% is now real-world assets like Treasuries), your sDAI will be worth less than expected If you use sDAI as collateral in lending protocols and DAI depegs, you could face liquidation even though sDAI is supposed to be a safe, yield-bearing asset
Should beginners deposit into sDAI?
sDAI is rated B+, which is acceptable for users who understand the protocol's mechanism. Beginners should read the full risk breakdown and only deposit after they can articulate the top three failure modes. If you cannot explain how the protocol works, do not deposit.
How does sDAI compare to safer Yield alternatives?
sDAI is one protocol in Hindenrank's Yield coverage. The safest Yield protocols on the leaderboard tend to share three traits: a long incident-free track record, conservative mechanism design, and high-quality public documentation. Compare sDAI against the full Yield ranking before committing capital.
For the full 8-dimension score breakdown, the radar chart, and dependency graph, see the sDAI risk report.
Read the Full sDAI Risk Report
This protocol has 2 collapse scenarios. 1 high-severity interaction risks identified. See the full mechanism classification, interaction matrix, and deep-dive recommendations.
View Full Report →Get risk alerts before it's too late
Weekly grade changes, downgrade alerts, and new protocol risk findings. Free.