MakerDAO has established itself as a leader in the realm of decentralized stablecoins, utilizing its native token DAI, which is backed by over-collateralized assets and governed by MKR holders. Companies in traditional finance are increasingly turning to DAI to manage their treasury liquidity, minimizing reliance on banking institutions. Additionally, decentralized finance (DeFi) platforms are incorporating DAI as collateral for lending and yield farming activities, highlighting the growing significance of MakerDAO within the financial ecosystem.
Key Metrics Snapshot
DAI’s projected supply is estimated to reach approximately $8.4 billion by 2025, while the market capitalization of MKR is expected to be around $4.6 billion. MakerDAO’s total value locked (TVL) is estimated at about $6 billion, indicating its vital role in on-chain lending. Real-world asset (RWA)-backed collateral amounts to $948 million, which constitutes 14% of its reserves, with RWA contributing to 10.9% of total revenue—equating to $35.7 million over 14 months. The stability fee for DAI vaults backed by ETH has been notably low, at 1.5% as of June 2025, with the overall market cap for DAI estimated at around $5.36 billion, mirroring its circulating supply.
Recent Advancements
In June 2025, FRAX was integrated as collateral, enhancing the diversity of backing assets. The Governance Module V2, launched in August 2025, aims to streamline the MKR voting process and simplify batch proposals. A dynamic adjustment to the DAI Savings Rate (DSR) was introduced in July 2025, allowing it to fluctuate between 0% and 8.75%. The ongoing Endgame roadmap for 2025 and 2026 seeks to decentralize operations into “MetaDAOs” under the newly named Sky DAO, which has also refined its RWA risk frameworks. Additionally, new Spark DAI Morpho Vault pools were sanctioned on June 20, broadening DeFi integration, while updates regarding Spark Protocol were announced throughout the spring of 2025.
MakerDAO Protocol Health Overview
MakerDAO currently holds a protocol score of 30.6 out of 100, reflecting a moderate health status and performance level. This score represents an increase of 3.3 points, suggesting recent enhancements in governance activities or system metrics. While the score lies within the 0–40 range, it indicates cautious market sentiment or a potential underutilization compared to its peak capacity. The critical threshold for concern is around 85, yet MakerDAO remains comfortably below this mark, signifying no immediate systemic risks. The color-coded scoring system places Maker in the green zone, suggesting stability, albeit with room for optimization.
Core Metrics of MakerDAO
The total supply of DAI stands at $8.4 billion, with both circulating and total supply figures around $5.36 billion, according to market cap data. The price of MKR is projected to be approximately $1,620 in 2025, with a 24-hour trading volume of $63.6 million. DAI’s peg stability remains impressive, showing weekly volatility as low as 0.003%, reinforcing its design to maintain a stable value of $1. Demand for DAI appears to be on the rise, while USDS is witnessing a decline, indicating a shift in supply dynamics noted by May 2025. Additionally, MakerDAO has been rebranded to Sky as part of its governance transition.
DAI Supply and Circulation Overview
The supply of DAI is projected to be $8.4 billion in 2025, with both circulating supply and market cap at approximately $5.36 billion. The volatility in DAI’s peg is minimal, with deviations of only 0.003% weekly. As of mid-May 2025, DAI has seen a 9% increase in supply, contrasting with a 10% decrease in USDS. This trend reflects DAI’s stable integration across DeFi, demonstrating sustained adoption in various protocols. The maintenance of DAI’s peg is actively managed through dynamic DSR adjustments and stability fees, with multi-collateral inclusion ensuring a robust minting process beyond ETH.
Understanding MakerDAO’s Liquidation Process
In the event of liquidation, both speculators and MakerDAO hold crypto-backed loans, facing potential impairment losses due to declining collateral values. Speculators are particularly vulnerable, holding sUSDe assets that exhibit an impairment block even before liquidation occurs. DAI holders, however, maintain their positions without suffering impairment losses prior to liquidation. Following liquidation, speculators may face bankruptcy, losing all value, while MakerDAO absorbs the failed sUSDe asset but retains its DAI and equity, showcasing its role as a buffer within the system. DAI holders remain fully protected, retaining 100% of their DAI and equity, thereby highlighting MakerDAO’s commitment to safeguarding its users.
Collateral Diversity and Composition
The composition of MakerDAO’s collateral includes $948 million in RWA, accounting for 14% of reserves, with RWA generating 10.9% of the protocol’s revenue over the past 14 months. The addition of FRAX further diversifies Maker’s collateral beyond traditional crypto-assets. Maker has maintained a multi-collateral approach since 2019, with an over-collateralization ratio of 155%, meaning $155 of collateral is required for every $100 of DAI minted. This strategic risk management approach, combined with a diverse range of assets including RWA and algorithmic assets, minimizes volatility exposure and enhances overall protocol health.
Collateralization Ratios and Requirements
MakerDAO mandates a minimum collateralization ratio of 150%, necessitating users to lock in $1.50 of assets for every $1 of DAI minted. In early 2025, emergency governance measures were implemented to lower collateral requirements for select vaults, easing the borrowing process. Typical collateral backing vaults maintain ratios between 150% and 200%, depending on the associated risk profile. These vaults often keep buffer zones well above the minimum requirements to accommodate price fluctuations, with real-time dashboards displaying backing ratios for different collateral types to enhance transparency. MakerDAO regularly adjusts liquidation ratios based on market volatility and collateral composition, with the Sky Protocol transition aiming to modify collateral management under a modular SubDAO structure.
Asset Allocation Breakdown
MakerDAO’s asset allocation reveals that T-bills constitute the largest segment, totaling $2.18 billion, reflecting a strategic move towards low-risk yield-generating instruments. ETH holdings follow closely at $1.40 billion, reinforcing MakerDAO’s foundational ties to the Ethereum ecosystem and DeFi-native collateral. Exposure to lending protocols amounts to $707 million, signifying active engagement in decentralized yield-generation platforms. RWA is valued at $263.3 million, indicating MakerDAO’s increasing diversification into off-chain investments. Stablecoin holdings are at $260.4 million, providing liquidity reserves to maintain DAI’s peg, while Coinbase custodial assets account for $140.1 million, emphasizing a notable allocation in centralized financial infrastructure. Liquidity pool assets stand at $159.7 million, likely tied to automated market maker (AMM) incentives, with Wrapped Bitcoin (WBTC) held at $112.9 million for Bitcoin-based collateral diversification. Other minor assets contribute a mere $1.79 million to the total portfolio.
Net Income and Profitability Insights
While specific net income figures for MakerDAO are not publicly disclosed, it is evident that broader DeFi platforms command over 72% of total lending TVL, suggesting a robust profitability trajectory. MakerDAO’s share of DeFi lending is about 28% of the TVL in 2025, indicating significant revenue generation potential. RWA collateral constitutes 10.9% of MakerDAO’s overall protocol revenue during the last 14 months. Main income sources include stability fees, liquidations, and governance auctions, with the MKR burn mechanism effectively linking profitability with token scarcity. The financial health of MakerDAO can be monitored through protocol dashboards that track vault activity, DAI issuance, and surplus auctions. The transition to Sky Protocol and the introduction of USDS may influence profit distributions towards multi-chain governance models, with ongoing operational costs focused on collateral risk management, Oracle security, and governance execution.
Revenue Generation Avenues
The primary revenue for MakerDAO stems from stability fees on vaults, which are adjusted according to asset type and associated risks. Liquidation penalties provide additional income during stressed market conditions, while surplus auctions convert excess collateral into revenue, concurrently burning MKR. RWA assets contribute a noteworthy 10.9% to the total revenue, marking a significant new income stream. The PSM swaps, which facilitate stablecoin-to-DAI conversions, also generate minor transaction fees. Upcoming governance proposals may introduce new collateral types, like FRAX, leading to updated fee structures. Enhanced protocols under the Sky initiative, such as USDS issuance and SKY burns, are likely to create new revenue streams, as vault reforms and risk parameter adjustments work to optimize revenue flows while maintaining stability.
Debt and Outstanding Loans Overview
The active DAI debt associated with vaults remains substantial, closely aligned with DAI’s total supply of $8.4 billion. Circulating supply accounts for $4.6 billion of this total, reflecting a significant base of outstanding loans. Debt issuance has experienced fluctuations, with a notable decrease of $38 million in February 2025 due to redemptions, followed by an increase of $41 million in March, and a slight reduction of $6.6 million in April. These variations are indicative of investor responses to yield adjustments and structural changes within the protocol during the rollout of USDS. Maker’s debt coverage remains strong, bolstered by deep collateralization buffers and diversified backing, allowing MakerDAO to continuously monitor outstanding loans to mitigate under-collateralization risks for vault holders. This dynamic lending environment illustrates confidence in DAI issuance and the effectiveness of risk management mechanisms.
Treasury and Balance Sheet Analysis
The treasury of MakerDAO encompasses a diverse range of collateral, now including both crypto assets and RWAs, as shown through accessible dashboards. RWA exposure constitutes 23.5% of total collateral, while PSM-related assets, such as USDC, represent approximately 32.9% of collateral, reflecting liquidity buffers. The remaining collateral consists of ETH/BTC derivatives and stablecoins, which together account for around 20%. The average over-collateralization of above 150% ensures a robust financial foundation. Live dashboards facilitate tracking of vault debt, collateral backing ratios, and liquidation risks, while the forthcoming Sky upgrade aims to reallocate treasury assets into modular SubDAO strategies. The minted DAI is supported by treasury-held assets, with any surplus either reinvested or auctioned as deemed necessary.
Token Supply and Distribution Dynamics
The supply of MKR is limited, with burns linked to protocol surpluses, which gradually decrease the total supply over time. MKR holders are responsible for governing key parameters such as collateral types, DSR, and emergency policies. The Sky Protocol is set to introduce a new token, SKY, which will replace MKR in governance functions. The issuance of USDS may influence trends in circulating DAI supply, altering distribution dynamics. MKR burns happen post-surplus auctions, aligning token scarcity with revenue generation. Although there is no explicit cap on MKR supply, deflationary mechanisms help maintain downward pressure on supply. The distribution of MKR remains decentralized among active governance participants and Core Units.
Buybacks and Burn Mechanisms
Surplus auctions play a crucial role in driving MKR buybacks and burns, directly linking protocol revenue to supply reduction. Burn rates are contingent upon DAI surplus and collateral performance, with the recent integration of RWA assets contributing to increased surplus flows, thereby enhancing burn volumes. Additionally, surplus from vault liquidations is channeled into buybacks, particularly during volatility spikes. The arrival of Sky may result in SKY token burns paralleling MKR’s, although the specific mechanisms are still in development. MKR burn data is transparently available through MakerDAO dashboards and governance records, illustrating the correlation between revenue and burn, which fosters a value-alignment model for users and token holders.
Insights on DAI Savings Rate (DSR)
MakerDAO has implemented a dynamic DSR that fluctuates between 0% and 8.75%, adjusted in real-time based on demand and market volatility. As of July 2025, the DSR is set at a competitive 4.5% APY, aimed at incentivizing DAI holders to remain engaged. Over the past year, the yield linked to DSR, represented as sDAI, has yielded 5.48% APY, attracting approximately $1.32 billion in total value locked. The price of sDAI has appreciated by 0.35% over 60 days, reflecting a steady level of investor confidence. Daily trading volume in sDAI is moderate at $1.35 million, indicating potential yield arbitrage opportunities. DAI holders continue to deposit and withdraw through MakerDAO’s on-chain DSR contracts, reinforcing the alignment of protocol stability with holder incentives, while diligently maintaining the $1 peg and rewarding long-term liquidity provision.
Real World Assets (RWA) Integration
The value of MakerDAO’s RWA collateral is currently around $948 million, constituting approximately 14% of total reserves. Reports from June 2025 indicate that USDS loan balances have surpassed $2.68 billion, highlighting the growing integration of RWAs. Revenue generated from RWA-backed assets accounted for 10.9% of MakerDAO’s income over a recent 14-month period. The pivot towards RWAs is a component of broader decentralization efforts through the Endgame roadmap, aimed at balancing the volatility of cryptocurrency investments with exposure to traditional financial assets. RWA-backed vaults are designed to offer more stable yields, linking DAI issuance to real economic assets, while the diverse collateral mix enhances the resilience of the protocol during market fluctuations. This emphasis on RWAs also bolsters Maker’s credibility among institutional players seeking compliant DeFi opportunities.
Liquidation Events and Risk Management Strategies
The MakerDAO dashboard provides real-time insights into liquidation events categorized by vault, collateral type, and severity, ensuring transparent risk management. In February 2025, three positions backed by ETH, valued at $340 million, faced liquidation thresholds that would be triggered if ETH prices dipped to approximately $1,900. Market stress can lead to significant liquidation cascades, posing under-collateralization risks. Maker’s auction mechanism has evolved to include descending multi-unit auctions, reducing the potential for exploitation during liquidation events. Keepers are essential in preserving protocol stability by facilitating liquidations and stabilizing debt positions, with dashboards displaying real-time credit loss rates and recovery performance to guide governance decisions. Overall, reforms surrounding liquidation processes reinforce MakerDAO’s adaptive risk framework, contributing to decentralized stability.
Governance Participation Structure
MakerDAO employs a dual voting structure comprising Polls to gauge sentiment and Executive Votes to enact changes. MKR holders possess the authority to vote on critical parameters, including DSR, collateral types, and system updates. The introduction of the Endgame initiative alongside the SKY token (with a conversion rate of 1 MKR to 24,000 SKY) is aimed at broadening governance participation within the community. Recent modifications to Governance Module V2 have streamlined the proposal voting process, reducing barriers for MKR holders. The MKR token recently experienced a remarkable 119% surge over seven days, driven by optimism surrounding governance reforms. This momentum in governance led to the burning of 4.2 million MKR tokens, indicating a strong alignment between protocol objectives and user incentives. However, academic research highlights that participation in DAO governance often remains skewed, dominated by coalition blocs.
Statistics from Spark Protocol
As the pioneering “Sky Star” SubDAO, Spark Protocol is designed to support specialized lending sectors under Sky DAO. It has integrated with Morpho Vault pools, enhancing the efficiency of DAI lending within the DeFi landscape. Institutional vaults and supply caps under Spark are included in governance adjustments made since early 2025. The expansion of collateral options through Spark diversifies the sources of capital and strengthens the liquidity of DAI. Spark’s infrastructure is structured to facilitate streamlined yield farming and risk-adjusted lending products, with governance aligned to the modular framework of Sky, allowing for precise risk management. The growth of Spark signals a significant shift for MakerDAO towards scalable and decentralized financial primitives.
Conclusion: The Evolution of MakerDAO
MakerDAO is currently evolving into Sky DAO, representing a convergence of stability, innovation, and decentralization. With its dynamic DSR, increasing exposure to RWA, and robust liquidation frameworks, the protocol effectively maintains its peg while creating yield opportunities. Recent governance reforms, token reallocations, and the establishment of new SubDAO models, such as Spark, signify a strategic shift in its operational approach. As MKR transitions to SKY, community engagement is set to broaden, and the protocol’s architecture will become modular and resilient. Ultimately, MakerDAO continues to uphold its legacy as a pioneering stablecoin backbone, purposefully adapting to meet the expanding demands of the DeFi landscape. Its responsiveness to real-world assets, yield incentives, and governance transformations invites further exploration into the balance of stability and agility in decentralized finance.
