To participate in the MakerDAO system, funds usually go through fiat on-ramping at a centralized exchange first. You can complete account opening and KYC from the Binance Official Site or the Official Binance App; if your Apple device can't install it directly, see the iOS Install Guide. MakerDAO is DeFi's earliest decentralized stablecoin protocol. DAI is minted by users collateralizing various assets (ETH, wstETH, WBTC, RWA, and more), with each vault carrying its own liquidation threshold and stability fee rate. As of April 2026, DAI's circulating supply is about $5 billion, and MakerDAO holds roughly $3.5 billion in RWA (mostly U.S. Treasuries), making it one of the strongest cash-flow protocols in DeFi.
MakerDAO launched in December 2017, founded by Rune Christensen, and is currently the oldest decentralized stablecoin protocol. Its design philosophy is "overcollateralization plus algorithmic governance" — users must deposit collateral worth more than 1.5x the value they want to borrow, and MKR holders vote to manage all the protocol's parameters.
In August 2024, the protocol rebranded to Sky. DAI's "upgraded" counterpart is called USDS, and MKR's upgraded counterpart is SKY (1 MKR = 24,000 SKY). The original DAI and MKR remain fully compatible and still circulate; for clarity, this article keeps using the MakerDAO/DAI/MKR names throughout.
According to DefiLlama's April 2026 data, MakerDAO's total value locked is about $6.5 billion (including RWA), with DAI in circulation at about $5 billion and USDS at about $1.8 billion. The protocol has generated more than $800 million in cumulative fee revenue on Ethereum mainnet.
CDP (Collateralized Debt Position) is MakerDAO's core concept, with each vault representing an independent debt position:
For example: a user deposits 5 ETH (worth $17,500 at $3,500/ETH) into an ETH-A vault (145% liquidation threshold).
Maximum borrow = 17,500 / 145% = $12,068
Conservative borrow = 17,500 / 200% = $8,750 (recommended)
After borrowing 8,750 DAI, at what price would ETH trigger liquidation?
Liquidation trigger price = 8,750 × 145% / 5 = $2,537
That is, ETH falling from $3,500 to $2,537 (-27.5%) triggers liquidation
According to MakerDAO's official data for April 2026:
| Vault type | Collateral | Liquidation threshold | Stability fee | Debt ceiling | Current debt |
|---|---|---|---|---|---|
| ETH-A | ETH | 145% | 5.5% | $2.5B | $1.8B |
| ETH-B | ETH | 130% | 6.5% | $0.5B | $0.12B |
| ETH-C | ETH | 170% | 4.5% | $1B | $0.65B |
| WSTETH-A | wstETH | 150% | 5.5% | $0.8B | $0.42B |
| WBTC-A | WBTC | 145% | 6.0% | $0.5B | $0.28B |
| RWA-A | Treasuries | 100% (special) | 0% | $1.2B | $0.8B |
| PSM-USDC | USDC | 100% (1:1) | 0.1% fee | $10B | $1.2B |
| PSM-USDP | USDP | 100% | 0% | $0.5B | $0.2B |
All three use ETH collateral, but the A/B/C tiers differ:
Users pick based on risk tolerance. With the same 5 ETH deposited: tier A allows borrowing up to $12,068, tier B up to $13,461, and tier C up to $10,294.
The PSM (Peg Stability Module) is the key mechanism MakerDAO uses to keep DAI's price stable. Users can swap USDC and DAI 1:1 (minus a 0.1% fee), which effectively gives DAI a hard peg within [0.999, 1.001].
The PSM also lets MakerDAO hold a large USDC reserve (about $1.2 billion), which gets invested in U.S. Treasuries through authorized partners, generating protocol revenue.
The Stability Fee is the annualized interest rate charged on borrowed DAI, set by MKR holder votes. The guiding principles:
Stability fees have swung widely over time: as high as 19.5% in April 2019, down to 0% in March 2020, back up to 5-7% in 2021-2022, and up again to 8-9% in 2023 as the Fed hiked rates and Treasury yields rose.
According to April 2026 data, mainstream stability fees sit in the 4.5%-6.5% range, tracking Fed policy rates and market funding costs. MakerDAO reinvests its stability fee revenue into Treasuries, creating a tight link between "DeFi interest rates" and "Treasury yields."
The DAI Savings Rate (DSR) is essentially the "deposit rate" for DAI holders — deposit DAI into the DSR contract and it compounds automatically at a protocol-set rate. The DSR is funded by RWA investment income and a portion of stability fee revenue.
As of April 2026, the DSR is about 8.5% (the USDS version is called SSR, Sky Savings Rate, at about 9.0%). That's higher than the deposit rates for USDC or USDT on Aave (roughly 4-5%), because MakerDAO passes Treasury yield directly through to depositors.
Features of the DSR:
When a vault's collateral ratio falls below the liquidation threshold, the protocol kicks off a liquidation process:
For example: a user's vault holds 5 ETH worth $9,000, with debt of 7,500 DAI (including fees), and the collateral ratio falls to 120%.
March 12, 2020 — "Black Thursday" — was the biggest stress test for MakerDAO's liquidation system. Ethereum's network was extremely congested at the time, and some liquidators won auctions with 0 DAI bids (because there was no competing bidder), leaving the protocol with about $5.4 million in bad debt. It was later covered through an emergency MKR auction. The event led to improvements in the auction mechanism, introducing the V2 Dutch auction.
MakerDAO began aggressively allocating to RWA (Real World Assets) in 2022 and is now one of DeFi's largest RWA holders.
| RWA type | Allocated amount | Yield | Partners |
|---|---|---|---|
| Short-term Treasuries | $2.2B | 5.2% | Monetalis, BlockTower |
| Corporate loans | $0.5B | 8-12% | Centrifuge, Maple |
| Private credit | $0.3B | 6-9% | Various SPVs |
| Regulated stablecoins | $0.5B | 5% | USDC, PYUSD |
| Total | $3.5B | Blended 5.5% | - |
RWA brings MakerDAO roughly $190 million a year in stable income, and is the key to the protocol's shift from being backed purely by crypto assets to a "crypto plus real-world assets" hybrid model. That income supports the high DSR rate (8.5%) and MKR buyback-and-burn activity (about $120 million bought back cumulatively in 2024-2025).
But RWA also brings new risks: regulatory scrutiny, counterparty default, and the difficulty of tracing off-chain assets. In 2024, an RWA borrower defaulted, causing about $8 million in losses, which was ultimately absorbed through an MKR holder governance vote.
MKR is MakerDAO's governance token, issued in 2017 with an initial supply of 1 million. Its main value-capture mechanisms:
Buyback-and-burn from protocol surplus: protocol revenue (stability fees plus RWA income, minus operating costs and DSR payouts) that exceeds a surplus buffer is used to buy back MKR on the market and burn it. Cumulative burns in 2024-2025 totaled about 4,500 MKR, roughly 0.45% of total supply.
Emergency issuance: when the protocol accrues bad debt, it automatically mints new MKR and auctions it off to cover the shortfall (as happened with 44,000 MKR in March 2020). This mechanism effectively passes "loss costs" on to MKR holders, which in turn gives them a strong incentive to keep the protocol safe.
Governance voting: MKR holders vote on all key parameters — stability fees, liquidation thresholds, new collateral types, emergency shutdown, and more.
According to CoinGecko's April 2026 data, MKR trades around $1,850, with a market cap of roughly $1.65 billion. SKY (the upgraded token) trades around $0.077, with the 1 MKR = 24,000 SKY conversion reversible in either direction.
MakerDAO has an "Emergency Shutdown" mechanism — once triggered by an MKR holder vote or an emergency committee, the protocol enters an orderly wind-down:
The purpose of this mechanism is to guarantee users can recover their assets if the protocol faces a serious risk (a contract exploit, external attack, or regulatory crackdown), rather than relying on the team to "make it right."
Emergency shutdown has never actually been triggered historically, but it was discussed in March 2020, during the USDC depeg in March 2023, and during an oracle anomaly in 2024.
| Dimension | DAI | USDC | USDT |
|---|---|---|---|
| Issuer | MakerDAO (decentralized) | Circle (regulated) | Tether (centralized) |
| Collateral | Crypto assets + RWA | USD + Treasuries | Mixed reserves (opaque) |
| Transparency | On-chain verifiable | Monthly attestation | Quarterly attestation (previously fined) |
| Legal status | Unregulated | NYDFS-regulated | Hong Kong offshore |
| Circulating supply | $5B | $35B | $110B |
| Depeg history | 0.95-1.10 (2020) | 0.87 (2023) | 0.93 (2022) |
Q: Is DAI really decentralized?
Partly. About 30% of DAI is backed by USDC (via the PSM) and RWA, which actually introduces dependency on centralized stablecoins and regulated assets. The remaining 70% is backed by overcollateralized crypto assets like ETH, wstETH, and WBTC, which is genuinely decentralized.
Q: Is MKR worth buying right now?
MKR has real cash flow (protocol surplus plus buyback-and-burn), but its price is fairly volatile and tracks overall DeFi market conditions. MKR ran up to $3,500 in early 2025 before falling back to $1,850. Whether it's worth investing in depends on your view of MakerDAO's long-term growth and its RWA strategy.
Q: Is borrowing DAI against ETH better than just selling ETH?
If you're bullish on ETH long-term but need cash short-term, borrowing DAI beats selling ETH — you keep your upside exposure and avoid triggering a taxable event. But you take on the stability fee (about 5%) and liquidation risk, so don't push your LTV too aggressively.
Q: Can DAI depeg?
Yes, but usually only slightly. In March 2020, DAI briefly rose to $1.10 (a liquidity crisis pushed up demand); in March 2023 it briefly dipped to $0.99 following USDC. The PSM module and DSR-based adjustments keep DAI holding steady within ±0.5% over the long run.
Q: After MakerDAO rebranded to Sky, does the old DAI still work?
Yes. DAI and USDS coexist long-term, and MKR and SKY convert 1:24,000 in either direction. Existing vaults, the PSM, DSR, and all other systems keep operating as usual — it's just a brand upgrade.
Q: Is DSR or an Aave USDC deposit the better deal?
DSR is usually higher (8.5% vs. Aave's 4-5%) and more stable (it comes directly from Treasury yield plus protocol fees). But DSR is a DAI rate, so you'd need to swap USDC into DAI through the PSM first, which costs a 0.1% fee.
Q: Will a MakerDAO liquidation wipe out all my collateral?
No. A liquidation only removes enough collateral to cover the debt (plus the 13% penalty), and the rest is returned to the original account owner. But the actual loss can still be significant — a single liquidation typically costs 15-25% of your principal.
Q: Do I owe tax on borrowing DAI through MakerDAO?
It varies by country. The U.S. IRS treats the act of borrowing itself as a non-taxable event, but selling the borrowed DAI can trigger tax; mainland China bans crypto trading and has no clear guidance; most of the EU applies capital gains tax to actual conversions.
Q: Is it cheaper to borrow DAI from MakerDAO or from Aave?
According to April 2026 data, MakerDAO's ETH-A stability fee is 5.5%, versus roughly 5.7% for borrowing DAI on Aave. The two are close, but MakerDAO has no per-address borrowing cap, so it may suit large borrowers better, while Aave is simpler to use for smaller amounts.
Q: Is DAI safe to hold on a centralized exchange?
DAI held on a CEX is subject to platform risk (as the FTX collapse showed, every token type carried risk for its holders there). If you're only holding it temporarily for trading, it's not a big deal; for long-term holding, it's better to withdraw to a self-custody wallet.
MakerDAO's official dashboard, Sky.money protocol data, DefiLlama, CoinGecko, Etherscan, and the MakerDAO governance forum (forum.makerdao.com).