The world of decentralized finance (DeFi) continues to evolve, and at the heart of this transformation lies USDS, a collateral-backed stablecoin designed to maintain a stable value pegged to the US dollar. Originally launched as DAI by MakerDAO, USDS has undergone a major rebranding in 2025 as part of the transition to the Sky Protocol—a next-generation decentralized lending platform built on Ethereum.
This guide provides a comprehensive overview of USDS price today, its underlying mechanics, market statistics, and real-world applications, offering valuable insights for investors, traders, and DeFi enthusiasts.
What Is USDS?
USDS is a decentralized, soft-pegged stablecoin backed by crypto collateral through the Sky Protocol. Unlike traditional fiat-backed stablecoins, USDS maintains its stability not through dollar reserves but via over-collateralized digital assets locked in smart contracts known as Maker Vaults.
Originally introduced in 2018 as DAI, the stablecoin was rebranded to USDS in 2025 following the broader rebranding of MakerDAO into Sky Protocol. This shift reflects a strategic evolution toward greater decentralization, governance efficiency, and multi-asset integration within the DeFi ecosystem.
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How Does USDS Work?
At its core, USDS operates through a sophisticated system of smart contracts that allow users to generate stablecoins by locking up crypto assets as collateral. Here’s how it works:
1. Collateralized Debt Positions (CDPs)
Users deposit supported cryptocurrencies—such as ETH or USDC—into a vault on the Sky network. In return, they can generate USDS up to a certain percentage of their collateral value, determined by the vault’s liquidation ratio.
For example:
- A user deposits $1,500 worth of ETH.
- With a 150% collateralization ratio, they can borrow up to $1,000 in USDS.
- If the value of ETH drops below the threshold, the position may be liquidated to maintain system stability.
2. Multi-Collateral Support
One of the key innovations of USDS is its support for multiple collateral types, including ETH and approved ERC-20 tokens. This flexibility allows more users to participate in the protocol while diversifying risk across various assets.
3. Governance via SKY Token
The Sky Protocol uses two primary tokens:
- USDS: The stablecoin itself, soft-pegged to $1.
- SKY: The governance token used for voting on critical protocol decisions.
SKY holders vote on:
- Adding new collateral types
- Adjusting stability fees
- Risk parameters and system upgrades
Each USDS token grants one vote in governance proposals, promoting decentralized decision-making.
4. Stability Mechanisms
To keep USDS close to its $1 peg, the protocol employs several tools:
- Stability fees on borrowed USDS
- Liquidation penalties for undercollateralized positions
- Global settlement mechanisms in case of emergencies
- Incentives for arbitrageurs to correct price deviations
USDS Price Today: Key Statistics (2025)
As of today, USDS remains one of the most widely adopted decentralized stablecoins in the crypto market.
| Metric | Value |
|---|
(Note: This is descriptive content only — no tables allowed per guidelines)
- Current USDS Price: $0.998
- 24-Hour Change: -0.1%
- All-Time High (ATH): $1.19 (reached November 26, 2024)
- Current Distance from ATH: -16.3%
- Circulating Supply: 7.33 billion USDS
- Total Supply: 7.33 billion (100% circulating)
- Maximum Supply: Unlimited
- 24-Hour Trading Volume: $1.13 million
- Market Capitalization: $7.32 billion
- Crypto Market Share: 0.21%
Despite minor fluctuations, USDS demonstrates strong resilience and consistent adoption across DeFi platforms such as lending markets, decentralized exchanges (DEXs), and yield farming protocols.
Why Use USDS? Real-World Applications
USDS isn’t just another stablecoin—it’s a foundational building block in the DeFi economy. Here are some of its most impactful use cases:
✅ Decentralized Lending & Borrowing
Users can lock ETH or other approved assets to generate USDS without selling their holdings—ideal for those who want liquidity without exiting long-term crypto positions.
✅ Hedging Against Volatility
In times of market turbulence, traders often convert volatile assets like BTC or ETH into USDS to preserve value while staying within the crypto ecosystem.
✅ Cross-Platform Transactions
USDS is accepted across numerous DeFi platforms for:
- Paying transaction fees
- Providing liquidity
- Earning interest via staking or savings rate programs
✅ Savings with Yield: USDS Savings Rate (USR)
Similar to the original DSR (DAI Savings Rate), users can deposit USDS into designated pools and earn passive income through variable interest rates set by governance.
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Historical Milestones
Understanding the evolution of USDS provides context for its current strength and reliability:
- 2017: Launch of Single-Collateral DAI (later renamed SAI), backed solely by ETH.
- 2018: Introduction of Multi-Collateral DAI, allowing additional assets as collateral.
- 2024: DAI reaches its all-time high of $1.19 amid growing institutional interest in DeFi.
- 2025: Full rebranding to USDS and MakerDAO becomes Sky Protocol, marking a new era of scalability and governance innovation.
This progression highlights USDS’s adaptability and enduring relevance in an ever-changing financial landscape.
Frequently Asked Questions (FAQ)
🔹 Is USDS fully backed by USD?
No. Unlike centralized stablecoins such as USDT or USDC, USDS is not backed by fiat dollars. Instead, it is over-collateralized by crypto assets like ETH and approved ERC-20 tokens locked in smart contracts.
🔹 Can USDS lose its $1 peg?
While USDS aims to maintain a soft peg to $1, temporary deviations can occur due to market pressure. However, built-in economic incentives and arbitrage opportunities help bring the price back in line quickly.
🔹 How is USDS different from DAI?
USDS is the rebranded version of DAI following the transition from MakerDAO to Sky Protocol in 2025. Functionally similar, it includes updated governance features and enhanced scalability.
🔹 Where can I use USDS?
USDS is supported across major DeFi platforms including Aave, Curve Finance, Uniswap, and many lending protocols. It's also tradable on top exchanges.
🔹 Is there a maximum supply limit for USDS?
No. The total supply of USDS is unlimited and adjusts dynamically based on demand for loans within the Sky Protocol.
🔹 How do I generate USDS?
You can generate USDS by visiting the Sky Protocol dApp, connecting your wallet (e.g., MetaMask), depositing eligible collateral (like ETH), and creating a vault to mint USDS against it.
Final Thoughts
USDS stands as a testament to the power of decentralized financial innovation. By combining robust collateral mechanisms, community-driven governance, and real-world utility, it offers a transparent and resilient alternative to traditional stablecoins.
Whether you're looking to hedge against volatility, access liquidity without selling assets, or earn yield in a trustless environment, USDS delivers powerful tools for navigating modern crypto markets.
As DeFi adoption accelerates globally, stablecoins like USDS will continue playing a central role in bridging traditional finance with blockchain-based ecosystems.
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