Maker—long known as MakerDAO—is one of DeFi’s oldest, most battle‑tested protocols. It introduced Dai (DAI) in 2017, a crypto‑collateralized stablecoin soft‑pegged to the U.S. dollar, and the MKR governance token used to manage risk, fees, and upgrades. In 2024–2025, Maker began a major overhaul dubbed Endgame, rebranding public‑facing products as Sky (with USDS and SKY positioned as upgrades to DAI and MKR). Because many users and apps still reference the Maker/MKR terminology, this guide explains how the system works today and clarifies what the rebrand means for MKR holders.
TL;DR
- Maker (aka the Sky Protocol) lets users mint or borrow a dollar‑like asset using crypto (and certain real‑world assets) as collateral.
- MKR is the legacy governance and recapitalization token: holders vote on parameters (risk, fees, collateral) and historically absorbed losses or benefited from buybacks.
- Key modules include Vaults (over‑collateralized loans), the Dai Savings Rate (DSR), and the Peg Stability Module (PSM) that helps keep the peg tight.
- In 2024–2025, the ecosystem introduced Sky/USDS/SKY and Spark, but MKR’s historical role and mechanics remain essential for anyone studying Maker.
How Maker works
1) Vaults (over‑collateralized debt). Users lock collateral (ETH, liquid staking tokens, RWAs via whitelisted partners, etc.) into a smart‑contract Vault and generate a dollar‑denominated liability. In the classic model, users minted DAI; under the Sky brand, USDS is presented as the upgraded stablecoin. If collateral value falls and the position breaches its liquidation ratio, the protocol auctions collateral to repay the debt plus penalties.
2) Stability fees and interest. Borrowers pay a stability fee (an interest‑like rate) that is set by governance per collateral type. These fees historically funded system surplus and the DSR (below).
3) DSR (Dai Savings Rate). The Dai Savings Rate allowed DAI holders to deposit into a contract and earn a protocol‑set yield sourced from stability fees and other income. It has functioned as a key monetary policy tool to manage DAI demand and peg stability.
4) PSM (Peg Stability Module). The PSM lets users swap approved stablecoins (e.g., USDC) for DAI (and back) at near‑par with minimal slippage. It has been critical during periods of stress, providing a direct arbitrage path to keep DAI close to $1, while increasing DAI’s exposure to the reserve assets it accepts.
5) Governance & risk. MKR holders vote on collateral onboarding, risk parameters, stability fees, DSR, and operations via on‑chain governance. Historically, if the system accrued a deficit after liquidations (e.g., black‑swan collateral crashes), MKR could be minted and auctioned to recapitalize the protocol—diluting holders. In surplus times, MKR could be bought back and burned. This built‑in “skin‑in‑the‑game” is central to MKR’s design.
The evolution: Endgame, Sky, USDS/SKY, and Spark
In 2024–2025, Maker rolled out the Endgame roadmap with a public rebrand to Sky. The rebrand introduces USDS(an upgraded, collateral‑backed dollar token) and SKY (an upgraded governance token) alongside a simplified user app and savings experience. While the branding and UX changed, the underlying Maker architecture—over‑collateralized stablecoin system, governance by token holders, and risk modules—remains the backbone.
A key piece of execution is Spark, a lending/earn stack aligned with Maker/Sky. Spark integrates deeply with the Maker allocation system to route liquidity into on‑chain markets and, over time, is governed by its own token (SPK) while remaining aligned with the broader Maker/Sky economics. In practice, Spark has served as a growth engine for stablecoin demand and on‑chain yield within the ecosystem.
Bottom line: If you’re new, you’ll see Sky/USDS/SKY in consumer‑facing apps and Maker/DAI/MKR in historical docs, research, and many DeFi integrations. Understanding both labels helps you map documentation to what you see on‑chain today.
What does MKR do in this design?
Governance power. MKR holders historically voted on smart‑contract upgrades, collateral onboarding, risk parameters, and monetary tools (DSR, PSM). Effective governance can increase protocol resilience and market trust.
Recapitalization & buybacks. MKR acts as a backstop when there is a shortfall (via mint‑and‑auction) and benefits during surpluses (via buy‑and‑burn). This risk‑return balance gives MKR economic exposure to the protocol’s performance.
Signaling & alignment. Large MKR holders—including risk teams and aligned service providers—have historically proposed and signaled parameter changes on public forums and voted on‑chain, shaping the protocol’s stance on everything from collateral types to real‑world asset exposure.
Why Maker matters in 2025
- Battle‑tested stability mechanics. Maker’s PSM and monetary levers have kept its dollar token near peg through several crypto cycles.
- Savings that scale with revenue. The DSR translates protocol income into a transparent base rate for holders, making the system competitive with stablecoin yields elsewhere.
- Real‑world asset (RWA) integrations. Over time, governance directed part of the balance sheet into Treasury‑like exposure through whitelisted partners to diversify revenue and dampen crypto volatility—one reason DAI/USDS yields sometimes track TradFi moves.
- Ecosystem flywheel via Spark. Spark funnels liquidity into productive venues (DeFi, CeFi, RWAs) and, by aligning incentives (including SPK), has helped deepen stablecoin liquidity and expand use cases.
Risks and trade‑offs to understand
- Peg risk & reserve composition. The PSM can increase exposure to centralized stablecoins (e.g., USDC). That tightens the peg but raises counterparty/regulatory exposure.
- Collateral volatility & liquidations. Sharp drawdowns of crypto collateral can trigger liquidations, penalties, and potential shortfalls—events that historically placed MKR at recapitalization risk.
- Governance capture. Concentrated voting power or low voter turnout can lead to sub‑optimal decisions. Public forums and transparency mitigate this but don’t eliminate it.
- Smart‑contract & operational risk. Like all DeFi, Maker relies on audited code and a culture of public review. Upgrades (e.g., Endgame/Sky changes) require careful governance to avoid regressions.
- Brand transition complexity. The dual use of Maker/MKR/DAI and Sky/SKY/USDS across apps, exchanges, and docs can cause short‑term confusion. Always verify ticker symbols, contract addresses, and interfaces before transacting.
How to use the system
- Borrow against collateral (Vaults). Deposit approved collateral (e.g., ETH) to mint a dollar token for trading, yield, or payments. Maintain a healthy collateralization ratio to avoid liquidation.
- Earn the base savings rate. Deposit your dollar token into the Savings contract (DSR/SSR, depending on branding) to earn the protocol‑set base rate. You can typically withdraw at any time.
- Swap stablecoins via PSM‑style rails. Use the PSM to swap into or out of the dollar token at tight spreads during volatility, remembering that fees and limits can change by governance.
- Participate in governance. If you hold MKR (or SKY, depending on the interface), review proposals, discuss in public forums, and vote. Stances on risk parameters and collateral types have direct, measurable effects on safety and yield.
MKR vs. SKY in one minute
- Ticker & role: MKR is the legacy governance/recapitalization token; SKY is its Endgame successor in consumer‑facing products. Many exchanges still list MKR, and upgrade mechanics have been staged via governance.
- Economics: Both represent governance exposure to system revenues and risks; details differ by phase and are set by evolving governance.
- What to check before acting: If you plan to trade or vote, confirm which token your venue/app supports (MKR or SKY), the contract address, and whether any upgrade/downgrade windows or fees apply.
Conclusion
Maker defined decentralized, collateral‑backed dollars and inspired the wider stablecoin field. MKR gave the protocol credible incentives—power when things go well and responsibility when they don’t. In 2025, as the ecosystem’s public face shifts to Sky with USDS and SKY, the fundamentals that made Maker resilient—over‑collateralization, programmatic monetary tools, transparent governance, and an expanding yield engine via Spark—remain the core story. If you understand how Vaults, DSR, PSM, and MKR governance fit together, you’ll be well‑equipped to navigate Maker’s next chapter—whatever logo it wears.