MakerDAO, the protocol behind the DAI stablecoin, stands as one of DeFi’s original building blocks. Launched in 2017, it pioneered overcollateralized, decentralized stablecoins. In 2025, the Endgame plan rebranded the protocol to Sky, introducing USDS and the SKY governance token alongside DAI and MKR. As of 2026-07-15, MakerDAO (now Sky) commands roughly ~$6B in total value locked on Ethereum, with no history of security incidents. This review examines whether the Endgame transition enhances or dilutes the protocol’s core value proposition.
What it is
MakerDAO is a decentralized stablecoin protocol on Ethereum. It mints DAI, a USD-pegged digital asset backed by excess cryptocurrency collateral. Founded in 2017 by Rune Christensen and the Maker Foundation, the protocol is governed by MKR token holders through a decentralized autonomous organization (DAO). In the 2025 Endgame overhaul, Maker rebranded to Sky, launching the USDS stablecoin (an upgrade to DAI) and the SKY governance token, while preserving DAI and MKR as legacy options. The protocol maintains over ~$6B in TVL and serves as a critical source of decentralized liquidity across DeFi. Its core mission remains: providing a stable medium of exchange independent of centralized issuers.
How it works
Users deposit approved collateral assets (ETH, wBTC, stETH, etc.) into smart contracts called Vaults. Each Vault allows minting DAI or USDS up to a collateralization ratio set by governance—typically 150% or higher. If the collateral value drops below the liquidation ratio, keepers trigger liquidations, auctioning collateral to cover the debt and a stability fee. Liquidated positions pay a penalty, ensuring protocol solvency. Minted DAI is freely transferable and widely used across DeFi for lending, trading, and payments. Stability fees accrue over time and are used to buy back and burn MKR/SKY.
MKR/SKY holders govern risk parameters: debt ceilings, stability fees, liquidation thresholds, and collateral types. They backstop the system in extreme deficit scenarios via dilution of the governance token. The protocol’s core contracts handle collateral locking, debt issuance, price feeds via oracles, and automated liquidation. The Endgame upgrade introduced SubDAOs and MetaDAOs for scalability, but the fundamental overcollateralization mechanism remains unchanged.
Key numbers
MakerDAO’s TVL, all on Ethereum, stood at roughly ~$6B as of 2026-07-15. Launched in 2017, it has undergone security audits from Trail of Bits, PeckShield, and ChainSecurity. No exploits have ever compromised the protocol. Governance token: MKR (also SKY). The protocol’s Vaults support multiple collateral types, with ETH remaining the dominant asset. Its pegged stablecoins, DAI and USDS, are widely used across DeFi.
Security and audits
MakerDAO’s security infrastructure is battle-tested. Three top-tier firms—Trail of Bits, PeckShield, and ChainSecurity—have conducted comprehensive audits of its smart contracts over multiple versions. No critical vulnerabilities or exploits have been publicly reported as of 2026.
The protocol is upgradable through its governance system. Proposals pass after token-holder voting and a timelock delay, with execution often managed by a multisig wallet controlled by the DAO’s core contributors. While this introduces centralization risks, the lengthy governance process and public accountability mitigate some concerns.
The Endgame upgrade introduced new contract code, which underwent additional audits. Despite the complexity, the foundational design of overcollateralization and liquidation has proven resilient through market crashes (Black Thursday 2020, Terra/LUNA collapse 2022). Still, the governance token’s backup role—print more MKR in crisis—remains a theoretically untested mechanism.
Strengths
1. Proven reliability: 8+ years without a single security breach, supporting ~$6B in TVL. DAI’s peg has held through multiple black-swan events.
2. Deep DeFi integration: DAI is a top-3 decentralized stablecoin by market cap, serving as collateral in Aave, Compound, and Curve, and as a quote asset on centralised and decentralised exchanges.
3. Decentralized governance: Risk parameters are controlled by MKR/SKY holders with a transparent on-chain voting process, avoiding single-point control.
Weaknesses and risks
1. Governance centralization: A small group of whale MKR holders can heavily influence votes. The rebranding to Sky and the addition of USDS/SKY add confusion and potential fragmentation.
2. Collateral dependency: Vaults are dominated by volatile crypto (ETH, wBTC). A steep market decline could trigger mass liquidations and strain the peg, though historically black-swan events like March 2020 saw the protocol survive due to prompt governance and liquidation mechanism.
3. Regulatory exposure: As a stablecoin issuer, MakerDAO faces increasing regulatory scrutiny, especially with the launch of USDS. Potential action could affect its operation or the status of its tokens.
How it compares
MakerDAO operates as a stablecoin protocol, distinct from lending or LST peers. Aave Aave ($22B TVL, 9 chains) dominates lending and launched its own stablecoin GHO, but GHO’s adoption is far smaller than DAI’s. Aave’s multi-chain expansion gives it liquidity depth that MakerDAO lacks on a single chain. Lido Lido (~$17.3B TVL) leads liquid staking, providing stETH as a yield-bearing asset, not a stablecoin, but its governance model and Ethereum-only footprint mirror MakerDAO’s. Morpho Blue Morpho Blue (~$7.3B TVL, multi-chain) offers permissionless lending markets where DAI is frequently used as a borrow asset, illustrating DAI’s deep utility.
In audits, all protocols use top-tier firms. MakerDAO’s 8-year incident-free record is matched by Aave (no major exploit) and Lido (Slashing events managed). However, MakerDAO’s TVL is concentrated in a single asset class (collateral), while Aave and Morpho spread risk across lending and borrowing markets. The Endgame introduces a more complex tokenomics and governance than either peer, which could be a detractor.
Verdict
MakerDAO remains a cornerstone of DeFi, with DAI’s stability and integration unrivaled among decentralized stablecoins. The Endgame rebrand and dual-token system add complexity but also potential for future scalability. Its security record is impeccable, and its governance, while centralized in practice, has navigated crises effectively. We rate MakerDAO 8.0/10, reflecting a bluechip protocol that must carefully manage governance evolution and regulatory headwinds.
DeFi Intel publishes editorial research, not financial advice. Do your own research and consult a licensed advisor for your situation.