A decentralised stablecoin system governed by token holders since 2017: MKR holders set risk parameters for Dai, a crypto-collateralised stablecoin, and bear losses. It survived the 2020 'Black Thursday' crash, dissolved its foundation in 2021 and rebranded as Sky in 2024 with the USDS stablecoin and SKY token.
MakerDAO was formed in 2014 by the Danish entrepreneur Rune Christensen to create a decentralised stablecoin. Its stablecoin, Dai, launched on Ethereum on 18 December 2017. Dai is created when users lock collateral in smart contracts ("vaults") and borrow against it; loans must stay over-collateralised, and if a vault's collateral falls below the required ratio anyone can trigger a liquidation that auctions the collateral. Holders of the MKR governance token set the system's risk parameters, add or remove collateral types and absorb losses. In August 2024 the project rebranded as Sky, introducing the USDS stablecoin and the SKY token, into which each MKR converts at a ratio of 24,000 SKY.
Maker is one of the oldest and largest examples of a protocol in which a token-holder vote governs a financial system holding billions of dollars of user assets.
MKR holders vote in proportion to their holdings, directly or through delegates. Off-chain polls signal preferences; binding changes are made by executive votes on code changes ("spells"), and a governance delay gives users time to react before changes take effect. Much day-to-day risk analysis was done first by the Maker Foundation and then, after the Foundation returned its MKR to governance and dissolved in 2021, by "core units", teams funded by the DAO. In 2022 Christensen proposed the "Endgame Plan", a long roadmap to simplify governance, create semi-autonomous sub-DAOs, incentivise governance participation and codify rules in a constitution-like "Atlas", partly to counter voter apathy and the concentration of power in delegates and core units.
Borrowers pay a stability fee; surplus has been used to buy and burn MKR, and under Sky's tokenomics as approved in November 2024, SKY is deflationary through buy-and-burn, and holders who lock tokens in a "seal engine" share in protocol surplus. Over time Maker diversified collateral from Ether to other crypto assets and to "real-world assets", including US Treasury exposure and arrangements with institutions such as Société Générale and Huntington Valley Bank. By early 2026 Sky reported a USDS supply of about $21 billion.
Black Thursday (12 March 2020). A crash in crypto prices at the start of the COVID-19 pandemic triggered mass liquidations. Network congestion delayed price updates and raised transaction fees, so some collateral auctions were won with bids of zero or near zero Dai. The system was left with a debt of roughly $5 million, which was covered by auctioning newly minted MKR, diluting holders. Vault owners who lost collateral sought compensation; an on-chain poll in April 2020 approved compensation in principle by about 62,000 to 33,000 MKR, and a detailed plan was drafted, though its authors stressed that MKR holders had no legal obligation to pay. The episode showed that governance by token holders also means loss-bearing by token holders, and that the "code is law" model depends on infrastructure that can fail under stress.
Centralisation and capture. Critics have pointed to the influence of large holders, including the founder, to low turnout and to the dependence of decentralised money on centralised collateral such as USDC and Treasury exposure. The Endgame restructuring, sub-DAOs and repeated changes to token design, including a late-2024 governance vote on whether to keep the Sky brand or return to Maker, were themselves contested.
Maker survived several crashes, kept Dai close to its peg most of the time and grew into one of the largest stablecoin issuers. Qin and colleagues' 2021 study of DeFi lending found that liquidation designs, including Maker's, reward liquidators well but sell excessive collateral at borrowers' expense. The project's history shows both the potential of on-chain governance to run a large financial system and its drift towards a founder-led programme with complex tokenomics.
A token-governed financial system that grew into one of the largest stablecoin issuers (about $21 billion USDS supply reported in early 2026). Black Thursday (2020) left about $5 million of bad debt covered by minting MKR. Governance shifted from a foundation to DAO-funded core units and then to the founder's Endgame restructuring and the 2024 Sky rebrand.
During the 12 March 2020 crash, network congestion and delayed price updates allowed some Maker collateral auctions to be won with zero or near-zero bids, leaving a system debt of about $5 million that was covered by auctioning newly minted MKR.[1]
MakerDAO rebranded as Sky in August 2024; under the tokenomics approved by governance in November 2024, MKR represents 24,000 SKY and SKY has no emissions and a buy-and-burn mechanism.[1][2]
Qin and colleagues found that DeFi lending liquidation designs, including MakerDAO's, strongly incentivise liquidators but sell excessive amounts of discounted collateral at borrowers' expense.[1]