Is Sky Safe?
Risk Grade: B- (30/100)
Sky is rated as moderate risk — some novel mechanisms, generally well-understood.
Lower risk — one of DeFi's oldest and most tested stablecoins, but the rebrand adds governance complexity and the freeze function is a philosophical break from decentralization
Formerly MakerDAO, this is the protocol behind the USDS stablecoin (upgraded DAI), with $5.5B in deposits. You can earn ~6% savings yield on your USDS or borrow against crypto collateral. Its B grade reflects years of battle-testing, weighed against new governance complexity and a controversial freeze function on USDS.
TVL
$7.1B
Mechanisms
10
Interactions
7
Value Grade
B+
Key Risks for Sky Users
USDS has a freeze function that can blacklist any address. This makes it censorable, like USDC. DeFi protocols might stop accepting USDS as collateral if the freeze is ever used
The new governance system splits decision-making across multiple sub-groups (Stars). During a market crash, these groups could disagree and deadlock, leaving the protocol unable to adjust fast enough to prevent bad debt
Part of the money backing USDS sits in real-world assets like US Treasuries. If those custodians fail or regulators freeze the assets, USDS could lose its $1 peg
Top Risk Factors
- •USDS freeze function introduces censorship risk that undermines decentralization, splitting the community between DAI purists and USDS adopters
- •Endgame SubDAO (Stars) governance is untested under market stress and could gridlock critical parameter changes when speed is essential
- •RWA collateral exposure introduces off-chain counterparty and legal jurisdiction risks to an on-chain protocol
Risk Score Breakdown
Sky's highest risk area is Scale Exposure (9/10). Here's how each dimension contributes to the overall 30/100 score:
Read the Full Sky Risk Report
This protocol has 3 collapse scenarios. 3 high-severity interaction risks identified. See the full mechanism classification, interaction matrix, and deep-dive recommendations.
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