What is Dai (DAI)?

DAI was the first stablecoin that did not require trusting a company to hold dollars. Launched by MakerDAO in 2017, it is minted by locking collateral worth more than the DAI you take out — originally only ETH, later a broader set including tokenised US Treasuries. If the collateral falls too far, it is liquidated automatically. No bank account, no issuer, no redemption desk.

It worked. DAI held its peg through multiple market collapses, including March 2020 when ETH fell by half in a day and Maker's auction system failed badly enough to leave the protocol with roughly $8 million of bad debt, recapitalised by diluting MKR. The system was rebuilt around that failure and has not repeated it.

The migration to USDS

In August 2024 MakerDAO rebranded to Sky and launched USDS, a parallel stablecoin upgrading from DAI at a fixed 1:1 rate. The multi-year transition completed in August 2026.

The major venues moved through 2026: Binance migrated DAI trading pairs, Earn, Margin and Pay services to USDS on 9 April, and Coinbase converted user balances between 4 and 6 May at approximately 1:1. Both tokens still circulate, and Sky's converter contract mints USDS from DAI on demand and burns in the other direction, so neither is stranded.

Why anyone would still hold DAI

One reason, and it is substantial. Shortly after the rebrand, Sky governance added a blacklist capability to USDS, letting the DAO block specific addresses from moving balances for legal or compliance reasons. DAI has no such function and cannot be given one.

That makes DAI the most censorship-resistant large stablecoin in existence — no freeze function, no admin key that can seize a balance, no regulated custodian holding the reserve. For most users this is irrelevant. For the ones it matters to, it is the only thing that matters, and it is the reason a meaningful minority deliberately did not migrate.

• A stablecoin with no issuer that can freeze it — the property USDS gave up.
• Collateral across DeFi, where DAI's integrations run back to 2017.
• A trading pair and settlement asset, though increasingly routed through USDS.
• Conversion to USDS at 1:1 for anyone who wants the savings rate and the newer integrations.

DAI's practical position in 2026 is as a legacy asset with one live advantage. New development happens on USDS, the Sky Savings Rate is paid on sUSDS rather than DAI, and exchanges have moved their products across. What remains is the censorship resistance, which cannot be replicated by the thing that replaced it.

DAI is minted against overcollateralised deposits and burned on repayment, so supply reflects borrowing demand rather than a schedule. The collateral mix has shifted heavily toward tokenised US Treasuries over the years, which is where most of the protocol's income now comes from.

That shift is the quiet story of DAI. A stablecoin created to avoid depending on the traditional financial system is now backed substantially by US government debt held through custodians — a pragmatic response to where yield is, and a long way from the original design.

Supply after the migration

DAI's float has declined as holders and venues converted to USDS, with USDS's supply now the larger of the two. Both are claims on the same collateral pool, so the split between them reflects preference rather than any difference in backing.

The relevant number for anyone holding DAI is not its supply but the health of the collateral behind it, which is shared with USDS and reported at the protocol level.

DAI cannot be staked, and the savings rate no longer applies to it. The Sky Savings Rate is paid on sUSDS, the staked form of USDS — converting DAI to USDS is a prerequisite for earning it.

That is the practical cost of holding DAI for its censorship resistance: you forgo the yield. It is a clean trade rather than a hidden one, and anyone holding DAI for the savings rate has simply not migrated yet.

Products offering a DAI yield elsewhere are lending arrangements with a third party.

It is being wound down, not maintained

New development, integrations and the savings rate all attach to USDS. DAI is supported and convertible and it is not where the protocol's effort goes. Legacy assets tend to lose liquidity and integrations gradually rather than suddenly.

Real-world asset concentration

Most of the protocol's income now comes from tokenised Treasury exposure held through counterparties and legal wrappers. That is a good trade in a high-rate environment and it reintroduces exactly the off-chain dependencies DAI was created to avoid. A failure there is not fixable by a smart contract.

Shared collateral, shared risk

DAI and USDS are claims on the same pool. Anything that damages the collateral backing USDS damages DAI identically — the freeze function is the only meaningful difference, and it does not insulate DAI from a solvency event.

Liquidation risk in a sharp drawdown

The crypto-collateralised portion can still be liquidated if prices move faster than auctions clear. March 2020 remains the precedent: roughly $8 million of bad debt and an MKR dilution to recapitalise. The system was rebuilt around that and the underlying mechanic has not changed.

Governance decides everything

Collateral types, ratios and parameters are set by SKY voters, and it was a governance vote that gave USDS a freeze function DAI does not have. The same body governs both.