Sky USDS Review

How Sky USDS scores in stablecoins

This entry rates USDS, the stablecoin of the Sky Protocol (formerly MakerDAO), in our stablecoin ranking. USDS is created by smart contracts against collateral and governed by SKY token holders; no company issues it or owes holders a dollar. That design shapes every mark below, because the category's criteria look for reserves, a regulator, a redemption counterparty and a custodian. The basis is desk research of sky.money, Sky's developer documentation for USDS and the LitePSM, and the Sky Frontier Foundation's April 2026 financial update, checked on November 1, 2026. No wallet was connected and no tokens were swapped. The category uses five equally weighted criteria, each marked 0 to 10, as set out in our ratings methodology.

The overall score is the plain average: (6 + 3 + 6 + 5 + 6) ÷ 5 = 26 ÷ 5 = 5.2. The previous overall was 5.0.

One mark changed on November 1, 2026. Redemption rights rose from 5 to 6 after Sky's LitePSM documentation showed that any address can exchange USDS for USDC at a fixed ratio through a public contract; the earlier entry had recorded no redemption route other than the market. The other four marks stay where they were.

Strongest criteria: redemption route, live collateral data and model (6 each)

Redemption rights (6)

The LitePSM (Peg Stability Module) is the nearest thing USDS has to redemption. Sky's developer guide says its swap functions are permissionless: any address can sell USDC for USDS or buy USDC with USDS at fixed ratios. That is wider access than issuers whose redemption is limited to onboarded customers. The mark stops at 6 for reasons the same guide sets out. The exit is to USDC, not to dollars. Governance sets the entry and exit fees and can halt swaps by raising them to the maximum. A swap fails when the module holds no balance, and the guide says there is no slippage protection. It is a contract, not a legal claim on anyone.

Reserve transparency (6)

sky.money publishes the full market value of the collateral, "including excess above coverage," next to supply: $15.37 billion against 9.54 billion USDS and DAI on November 1, 2026, roughly 161%. The supply figure combines USDS and DAI because the two convert 1:1. The mark is held at 6 because the composition sits on a separate Sky financial page that rendered without data for this check, and the Sky Frontier Foundation's April 2026 update gives only totals ($13.03 billion of collateral against $12.96 billion of obligations). That foundation says it is independent and that its reports are not official protocol documentation. No accountant attests to either figure.

Backing model clarity (6)

The developer documentation now explains the mechanics: USDS is generated against collateral that governance approves, converts 1:1 with DAI with no fee, and can be swapped for USDC through the LitePSM. The old entry's complaint that the peg mechanism was undocumented no longer holds. The mark does not rise because the other half of the criterion, what the collateral actually is, could not be read from a published page. Without the mix of crypto loans, USDC and other assets, a reader cannot judge how the backing would behave in a market fall.

Weakest criteria: oversight and custody

Regulatory oversight (3)

No regulator supervises USDS because no company issues it. This is a structural absence rather than a breach, but the criterion scores supervision that holders can rely on, and there is none. Skybase International, which runs the sky.money app, says in its terms that it does not hold users' assets or control the protocol.

Custody & segregation (5)

Collateral held in public contracts can be inspected on chain, which is why this mark is not lower. Against that, the USDS contract is upgradeable (UUPS proxy), so the code holding the system together can change by governance decision, and no custodian is named for any assets held off chain. Fiat issuers that name a bank custodian score 9 here.

What the score does not cover

• Sky Savings Rate. sky.money showed 3.80% APY for sUSDS on November 1, 2026. The rate is variable and set by governance; it is not part of the score and is not an assessment of return.
• Smart contract and governance risk. Audits, bug bounties and how governance votes are cast were not measured.
• Dependence on USDC. Because the swap route runs through USDC, a problem at USDC would affect it. This is noted, not scored.
• Interface access. sky.money restricts some jurisdictions; the token itself can be held in any compatible wallet.

Our guide on how to assess a stablecoin explains why reserves, redemption and regulation mean different things for a protocol-issued coin.

Sky USDS vs Tether and Ethena USDe

Tether (USDT) averages 5.4 after its own November 1 recheck, just above Sky USDS. Tether scores higher on regulatory oversight (5) and backing clarity (7) and lower on redemption (5) and custody (4). Ethena USDe, the other non-bank design in the category, averages 4.8 after its recheck: it scores higher on backing clarity (7), level on custody (5) and lower on oversight (2) and redemption (4). Fiat-reserve issuers such as USD Coin, at 9.0, sit well above all three, mainly on oversight and custody.

Who this rating suits

The score describes a stablecoin with no issuer to supervise or sue, live collateral totals and an open contract route to USDC. It is most relevant to an on-chain user who values that access and can read the protocol's own data. It is less suited to someone who wants a regulated counterparty and a legal right to dollars. The score assesses published documentation and is not a recommendation to hold any token.