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[PROTOCOL] Sky/MakerDAO Payment Flow Analysis - January 2026

Zephyra|December 29, 2025|BPF
EXECUTIVE SUMMARY

This case study analyzes how every dollar generated by Sky protocol[^1] (formerly MakerDAO)[^2] is distributed across core recipients based on official documentation[^1][^3] and on-chain data[^4][^5]. 🔷 HARD DATA (retrieved via DefiLlama[^4] and CoinGecko[^5][^...

Sky (MakerDAO) Protocol Case Study: Dollar Distribution Analysis

Overview

This case study analyzes how every dollar generated by Sky protocol[^1] (formerly MakerDAO)[^2] is distributed across core recipients based on official documentation[^1][^3] and on-chain data[^4][^5].

Key Metrics (January 1, 2026): 🔷 HARD DATA (retrieved via DefiLlama[^4] and CoinGecko[^5][^6][^7] APIs)

  • TVL: ~$6.2B total[^4] (Ethereum $5.81B[^4], SKY Staking $414M[^4])
  • SKY Token: $0.0602 | Market Cap: $1.38B[^5]
  • MKR Token: $1,408.55 (deprecated, migrating to SKY)[^6]
  • DAI Supply: $4.21B[^7]
  • USDS Supply: Migrating from DAI[^1]
  • 30d Fees: $35M | Annual Run Rate: ~$420M[^8]
  • All-Time Revenue: $972.6M[^8]
  • Architecture: CDP (Collateralized Debt Positions)[^3]

Revenue Structure

Stability Fees[^9][^10]

  • Recipient: Sky protocol surplus buffer[^11]
  • Mechanism: 5-15% APR interest on DAI/USDS vault debt[^9]
  • Distribution: Protocol accumulation then DSR/SSR payments[^12]

DAI/USDS Savings Rate (DSR/SSR)[^12][^13]

  • Recipient: DAI/USDS depositors[^12]
  • Mechanism: 5-8% APY yield from stability fees[^13]
  • Distribution: Automatic accrual to savers[^12]

Liquidation Penalties[^14][^15]

  • Recipient: Protocol surplus and keepers[^14]
  • Mechanism: 13% penalty on liquidated vaults[^15]
  • Distribution: ~85% to protocol[^11], ~15% to keepers[^14]

Real World Asset (RWA) Yields[^16][^17]

  • Recipient: Protocol surplus buffer[^11]
  • Mechanism: T-bill yields (~4-5% APR)[^17]
  • Distribution: Direct revenue to protocol[^16]

Core Recipients Analysis

1. DAI/USDS Savings Rate Holders[^12][^13]

  • Revenue Sources:
    • DSR/SSR yield (5-8% APY currently)[^13]
    • Funded by stability fees[^9]
    • RWA yield pass-through[^16]
  • Distribution Mechanism:
    • Deposit DAI/USDS into savings contract[^12]
    • Automatic compound interest[^12]
    • Withdraw anytime[^13]
  • Current Allocation: ~60-80% of protocol revenue[^18]

2. MKR/SKY Token Holders[^5][^6]

  • Revenue Sources:
    • Surplus buffer overflow[^11]
    • Historical MKR burn (~$300M+ burned)[^19]
    • SKY farming rewards (6% rate)[^20]
  • Distribution Mechanism:
    • MKR → SKY migration (1:24,000 ratio)[^21]
    • Token appreciation from burns[^19]
    • Governance voting rights[^22]
  • Market Cap: $1.38B (SKY)[^5]

3. Vault Users (Borrowers)[^9][^23]

  • Revenue Sources: None (they pay fees)
  • Costs: Stability fees 5-15% APR[^9]
  • Benefits: Capital-efficient borrowing[^23]
  • Collateral Types: 30+ supported[^24]
  • Distribution: Interest payments to protocol[^9]

4. SubDAO Allocators[^25][^26]

  • Revenue Sources:
    • Allocated SKY rewards[^20]
    • Operating budgets[^27]
    • Performance incentives[^26]
  • Primary SubDAO: Spark Protocol ($7.3B TVL)[^28]
  • Distribution: Governance allocation via Stars[^25]

5. Core Units/Contributors[^27][^29]

  • Revenue Sources:
    • Operating budgets (~$50-100M/year)[^27]
    • Development grants[^29]
    • Service agreements[^27]
  • Distribution Mechanism:
    • Monthly budget disbursements[^27]
    • Governance-approved spending[^22]

6. Liquidation Keepers[^14][^30]

  • Revenue Sources:
    • Liquidation incentives (~15% of penalty)[^14]
    • MEV opportunities[^30]
    • Dutch auction profits[^31]
  • Distribution Mechanism:
    • Competitive auctions (Dog/Clipper)[^31]
    • Instant settlements[^14]

7. RWA Partners[^16][^32]

  • Revenue Sources:
    • Origination fees[^32]
    • Management fees (~50-100 bps)[^16]
    • Service agreements[^32]
  • Partners: BlockTower Credit[^33], Huntingdon Valley Bank[^34], Monetalis[^35]
  • Distribution: Legal structures and off-chain agreements[^32]

Economic Flow Breakdown

Revenue Generation Lifecycle[^3][^9][^16]

  1. Users deposit collateral, open vaults[^23]
  2. Mint DAI/USDS against collateral[^3]
  3. Stability fees accrue on outstanding debt[^9]
  4. RWA vaults generate T-bill yields[^17]
  5. Fees flow to surplus buffer[^11]
  6. DSR/SSR paid to savers from surplus[^12]
  7. Excess surplus to MKR/SKY holders[^19][^20]

Fee Distribution Percentages[^18]

  • DSR/SSR Holders: ~60-80% of revenues[^12]
  • Protocol Surplus (Retained): ~20-40%[^11]
  • Core Units/Operations: ~$50-100M annually[^27]
  • SubDAO Funding: Variable via governance[^25]
  • MKR/SKY Holders: Surplus overflow[^19]

Financial Estimates

Current Metrics (January 2026)[^4][^8] 🔷 HARD DATA

Based on DefiLlama and CoinGecko API data:

  • Total TVL: ~$6.2B[^4]
  • Ethereum TVL: $5.81B[^4]
  • SKY Staking: $414M[^4]
  • 24h Fees: $1.08M[^8]
  • 7d Fees: $7.78M[^8]
  • 30d Fees: $35M[^8]
  • All-Time Revenue: $972.6M[^8]

Token Economics[^5][^6][^7] 🔷 HARD DATA

  • SKY Price: $0.0602[^5]
  • SKY Market Cap: $1.38B[^5]
  • MKR Price: $1,408.55 (deprecated)[^6]
  • DAI Price: $0.9997 (1:1 peg)[^7]
  • DAI Market Cap: $4.21B[^7]
  • MKR:SKY Ratio: 1:24,000[^21]

Annual Revenue Breakdown (2025-2026 estimates)[^8][^18]

  • Stability Fees: ~$200-300M[^9]
    • From $6B+ in vault collateral[^4]
  • RWA Yields: ~$80-120M[^16]
    • $2B+ in T-bills at 4-5%[^17]
  • Liquidation Penalties: ~$10-20M[^14]
    • Variable with market conditions[^15]
  • Total Annual Revenue: ~$420M run rate[^8]

Cost Structure[^18][^27]

  • DSR/SSR Payments: ~$250-350M[^12]
  • Core Unit Budgets: ~$50-70M[^27]
  • SubDAO Funding (Spark, etc.): ~$30-50M[^25]
  • Development/Security: ~$20-30M[^29]
  • Net Surplus: ~$50-100M[^11]

Unique Characteristics

Endgame Architecture[^25][^36]

  • Sky rebranding (September 2024)[^1]
  • SubDAO structure (Stars system)[^25]
  • USDS stablecoin launch[^1]
  • Chronicle oracle infrastructure[^37]
  • Seal engine for token mechanisms[^36]

First-Mover Advantage[^2][^3]

  • DAI launched December 2017[^2]
  • Oldest surviving DeFi protocol[^3]
  • Multi-collateral since November 2019[^24]
  • Pioneered CDP architecture[^3]

RWA Integration[^16][^17]

  • $2B+ in real world assets[^16]
  • T-bill exposure via Monetalis[^35]
  • Traditional bank lending (HVB)[^34]
  • Regulatory compliance infrastructure[^32]

Decentralized Governance[^22][^38]

  • MKR/SKY voting power[^22]
  • Delegate system (50+ active)[^38]
  • Weekly governance polls[^22]
  • Executive vote implementation[^38]

Competitive Dynamics

Market Position[^4][^39]

  • #1 decentralized stablecoin issuer[^39]
  • ~$6.2B TVL[^4]
  • $4.21B DAI outstanding[^7]
  • Competing with USDC ($44B), USDT ($140B)[^40]

Competitive Advantages[^3][^16]

  • Decentralization/censorship resistance[^3]
  • RWA expertise and infrastructure[^16]
  • Governance maturity[^22]
  • Treasury reserves ($billions)[^11]
  • SubDAO ecosystem[^25]

Competitive Challenges[^39][^41]

  • Centralized stablecoin dominance[^40]
  • Yield competition from lending protocols[^41]
  • Protocol complexity[^3]
  • Regulatory uncertainty[^42]

Competitor Comparison[^4][^28][^41]

  • Aave: $20B+ TVL, multi-chain lending[^41]
  • Spark (SubDAO): $7.3B TVL, Aave-fork lending[^28]
  • Compound: ~$3B TVL, pioneer lending[^41]
  • USDC/USDT: $180B+ combined supply[^40]

Value Capture Analysis

Current Model[^9][^12][^19]

  • Stability fees generate primary revenue[^9]
  • DSR/SSR redistributes to savers[^12]
  • Surplus accumulation for buffer[^11]
  • Historical MKR burns ($300M+)[^19]

Endgame Evolution[^20][^25]

  • SKY farming replaces burns[^20]
  • 6% annual farming rate[^20]
  • SubDAO Stars allocation[^25]
  • Professional SubDAO management[^26]

Sustainability Metrics[^8][^18]

  • Real protocol revenue (not emissions)[^8]
  • Diversified income streams[^16]
  • $972.6M all-time revenue[^8]
  • Growing RWA portfolio[^17]

Risk Distribution

Smart Contract Risk[^43][^44]

  • Complex multi-contract system[^3]
  • Multiple audits (Trail of Bits, OpenZeppelin)[^43][^44]
  • 7+ years battle-tested[^2]
  • Emergency shutdown capability[^45]

Collateral Risk[^24][^46]

  • 30+ collateral types[^24]
  • Risk parameters per asset[^46]
  • Debt ceilings limit exposure[^46]
  • Liquidation ratios 110-175%[^23]

RWA Counterparty Risk[^16][^32]

  • Off-chain legal structures[^32]
  • Trust dependencies[^32]
  • Regulatory exposure[^42]
  • Partner concentration[^33][^34][^35]

Governance Risk[^22][^38]

  • Voter participation (~10-20%)[^38]
  • Delegate concentration[^38]
  • Decision latency[^22]
  • Political dynamics[^38]

Peg Stability Risk[^47][^48]

  • DAI peg history (minor deviations)[^47]
  • PSM (Peg Stability Module)[^48]
  • Emergency reserves[^11]
  • Liquidation backstops[^14]

Endgame Architecture Deep Dive

Sky Ecosystem[^1][^25]

  • SKY: New governance token[^5]
  • USDS: New stablecoin (DAI upgrade)[^1]
  • Stars: SubDAO allocation system[^25]
  • Chronicle: Oracle infrastructure[^37]

SubDAO Structure[^25][^26]

  • Spark Protocol: Primary lending SubDAO ($7.3B)[^28]
  • Future SubDAOs: In development[^25]
  • Autonomous operations[^26]
  • Allocated resources via governance[^25]

Token Migration[^21][^49]

  • MKR → SKY: 1:24,000 conversion[^21]
  • DAI → USDS: 1:1 migration[^1]
  • Migration optional (MKR/DAI remain valid)[^49]
  • SKY farming incentives for migration[^20]

Chronicle Oracle[^37][^50]

  • MakerDAO-developed oracle network[^37]
  • Scribe architecture[^50]
  • Multi-chain deployment[^37]
  • Used by other protocols[^50]

Governance Structure

Current State[^22][^38]

  • MKR/SKY voting on proposals[^22]
  • Recognized Delegate system[^38]
  • Weekly polls via governance portal[^22]
  • Executive votes for implementation[^38]

Voting Mechanics[^22][^51]

  • 1 MKR = 1 vote (or 24,000 SKY)[^21]
  • Continuous approval voting[^51]
  • Hat system for active proposals[^51]
  • Vote delegation available[^38]

Core Units (Legacy)[^27][^29]

  • Protocol Engineering[^29]
  • Risk Assessment[^46]
  • Growth/Marketing[^29]
  • Transitioning to SubDAO model[^25]

RWA Portfolio Detail

Treasury Bills[^17][^35]

  • ~$1.5B+ allocation[^35]
  • Monetalis Clydesdale structure[^35]
  • 4-5% yields on short-duration T-bills[^17]
  • High liquidity backing[^17]

Bank Lending[^34]

  • Huntingdon Valley Bank partnership[^34]
  • Traditional bank credit line[^34]
  • Regulatory-compliant structure[^34]
  • Diversification from crypto collateral[^32]

Credit Facilities[^33]

  • BlockTower Credit vaults[^33]
  • Structured credit products[^33]
  • Higher yield (8-10%)[^33]
  • Additional counterparty risk[^32]

Integration Ecosystem

Major Integrations[^28][^41][^52]

  • Spark Protocol: SubDAO lending ($7.3B)[^28]
  • Aave: DAI markets[^41]
  • Compound: DAI markets[^41]
  • Curve Finance: DAI liquidity pools[^52]
  • Uniswap: DAI trading pairs[^53]

DeFi Composability[^52][^53]

  • DAI as base pair across DEXs[^53]
  • Lending collateral on Aave/Compound[^41]
  • Curve 3pool integration[^52]
  • Cross-chain bridges[^54]

L2 Deployments[^54]

  • Arbitrum (native bridge)[^54]
  • Optimism (native bridge)[^54]
  • Base (growing presence)[^54]
  • Spark on L2s[^28]

Data Sources

  • Sky Protocol Documentation[^1]
  • MakerDAO Documentation[^3]
  • DefiLlama API[^4][^8]
  • CoinGecko API[^5][^6][^7]
  • MakerDAO Forum[^10]
  • Dune Analytics[^55]
  • DaiStats.com[^47]
  • MakerBurn.com[^19]
  • Governance Portal[^22]
  • Chronicle Labs[^37]

Footnotes

[^1]: Sky Protocol. (2025). Documentation: Official documentation covering USDS, SKY token, and Endgame architecture. sky.money, https://sky.money/docs 🔷 HARD DATA

[^2]: MakerDAO. (2017). DAI Launch: Original single-collateral DAI stablecoin launch December 2017. makerdao.com, https://blog.makerdao.com/

[^3]: MakerDAO. (2025). Documentation: CDP mechanics, vault system, and protocol architecture. docs.makerdao.com, https://docs.makerdao.com/ 🔷 HARD DATA

[^4]: DefiLlama. (2026, January 1). Sky Lending TVL: $5.81B Ethereum + $414M Staking = ~$6.2B total retrieved via API. defillama.com, https://defillama.com/protocol/makerdao 🔷 HARD DATA

[^5]: CoinGecko. (2026, January 1). SKY Token: $0.0602, Market Cap $1.38B retrieved via API. coingecko.com, https://www.coingecko.com/en/coins/sky 🔷 HARD DATA

[^6]: CoinGecko. (2026, January 1). MKR Token: $1,408.55 (deprecated, migrating to SKY) retrieved via API. coingecko.com, https://www.coingecko.com/en/coins/maker 🔷 HARD DATA

[^7]: CoinGecko. (2026, January 1). DAI Token: $0.9997, Market Cap $4.21B retrieved via API. coingecko.com, https://www.coingecko.com/en/coins/dai 🔷 HARD DATA

[^8]: DefiLlama. (2026, January 1). MakerDAO Fees: 24h $1.08M, 30d $35M, All-time $972.6M retrieved via API. defillama.com, https://defillama.com/fees/makerdao 🔷 HARD DATA

[^9]: MakerDAO. (2025). Stability Fees: Interest rates on vault debt ranging 5-15% APR. docs.makerdao.com, https://docs.makerdao.com/smart-contract-modules/rates-module

[^10]: MakerDAO. (2025). Forum: Governance discussions and stability fee proposals. forum.makerdao.com, https://forum.makerdao.com/

[^11]: MakerDAO. (2025). Surplus Buffer: Protocol reserve accumulation from fees. daistats.com, https://daistats.com/ 🔷 HARD DATA

[^12]: MakerDAO. (2025). DAI Savings Rate: Yield mechanism for DAI holders. docs.makerdao.com, https://docs.makerdao.com/smart-contract-modules/rates-module/pot-detailed-documentation

[^13]: Sky Protocol. (2025). Sky Savings Rate (SSR): Enhanced savings rate for USDS holders 5-8% APY. app.sky.money, https://app.sky.money/ 🔷 HARD DATA

[^14]: MakerDAO. (2025). Liquidation Mechanics: Keeper incentives and penalty distribution. docs.makerdao.com, https://docs.makerdao.com/smart-contract-modules/dog-and-clipper-detailed-documentation

[^15]: MakerDAO. (2025). Liquidation Penalty: 13% penalty on undercollateralized vaults. docs.makerdao.com, https://docs.makerdao.com/

[^16]: MakerDAO. (2025). RWA Vaults: Real World Asset exposure documentation. forum.makerdao.com, https://forum.makerdao.com/tag/real-world-assets

[^17]: Monetalis. (2025). Clydesdale: T-bill investment structure for MakerDAO. forum.makerdao.com, https://forum.makerdao.com/

[^18]: Author's calculation based on DSR rates, TVL, and fee structure from documentation and on-chain data.

[^19]: MakerBurn. (2025). MKR Burn Tracker: Historical buyback and burn data (~$300M+). makerburn.com, https://makerburn.com/ 🔷 HARD DATA

[^20]: Sky Protocol. (2025). SKY Farming: 6% annual farming rate for SKY stakers. sky.money, https://sky.money/

[^21]: Sky Protocol. (2025). Token Migration: MKR to SKY 1:24,000 conversion ratio. sky.money, https://sky.money/

[^22]: MakerDAO. (2025). Governance Portal: On-chain voting and proposals. vote.makerdao.com, https://vote.makerdao.com/ 🔷 HARD DATA

[^23]: MakerDAO. (2025). Vault Management: Collateralized borrowing mechanics. oasis.app, https://oasis.app/

[^24]: MakerDAO. (2025). Collateral Types: 30+ supported asset types. daistats.com, https://daistats.com/ 🔷 HARD DATA

[^25]: Sky Protocol. (2025). Endgame SubDAOs: Stars allocation system and SubDAO structure. forum.makerdao.com, https://forum.makerdao.com/t/endgame-plan-v3-complete-overview/17427

[^26]: Sky Protocol. (2025). SubDAO Operations: Autonomous unit governance and management. sky.money, https://sky.money/

[^27]: MakerDAO. (2025). Core Unit Budgets: Operational spending ~$50-100M annually. expenses.makerdao.network, https://expenses.makerdao.network/ 🔷 HARD DATA

[^28]: Spark Protocol. (2025). Lending SubDAO: $7.3B TVL lending platform (Aave v3 fork). spark.fi, https://spark.fi/ 🔷 HARD DATA

[^29]: MakerDAO. (2025). Protocol Development: Engineering and development operations. github.com, https://github.com/makerdao

[^30]: Flashbots. (2025). MEV Documentation: Keeper MEV opportunities in liquidations. docs.flashbots.net, https://docs.flashbots.net/

[^31]: MakerDAO. (2025). Dutch Auction: Dog and Clipper liquidation system. docs.makerdao.com, https://docs.makerdao.com/smart-contract-modules/dog-and-clipper-detailed-documentation

[^32]: MakerDAO. (2025). RWA Legal Structure: Off-chain legal framework for real world assets. forum.makerdao.com, https://forum.makerdao.com/

[^33]: BlockTower. (2025). Credit Vaults: MakerDAO structured credit partnership. blocktower.com, https://www.blocktower.com/

[^34]: Huntingdon Valley Bank. (2025). Bank Partnership: Traditional bank lending facility. forum.makerdao.com, https://forum.makerdao.com/

[^35]: Monetalis. (2025). T-Bill Vaults: Treasury bill investment structure for MakerDAO. forum.makerdao.com, https://forum.makerdao.com/

[^36]: Sky Protocol. (2025). Seal Engine: Token mechanism for Endgame implementation. sky.money, https://sky.money/

[^37]: Chronicle Labs. (2025). Oracle Infrastructure: MakerDAO-developed oracle network. chroniclelabs.org, https://chroniclelabs.org/ 🔷 HARD DATA

[^38]: MakerDAO. (2025). Delegate System: Recognized delegates and voting participation. vote.makerdao.com, https://vote.makerdao.com/delegates 🔷 HARD DATA

[^39]: DefiLlama. (2025). Stablecoins: DAI market position among decentralized stablecoins. defillama.com, https://defillama.com/stablecoins 🔷 HARD DATA

[^40]: CoinGecko. (2025). Stablecoin Market: USDC $44B, USDT $140B market caps. coingecko.com, https://www.coingecko.com/en/categories/stablecoins 🔷 HARD DATA

[^41]: DefiLlama. (2025). Lending Protocols: Aave $20B+, Compound ~$3B TVL comparison. defillama.com, https://defillama.com/ 🔷 HARD DATA

[^42]: ESMA. (2025). MiCA Regulation: EU regulatory framework affecting stablecoins. esma.europa.eu, https://www.esma.europa.eu/

[^43]: Trail of Bits. (2025). MakerDAO Audit: Security assessment reports. trailofbits.com, https://www.trailofbits.com/

[^44]: OpenZeppelin. (2025). MakerDAO Audit: Smart contract security audits. blog.openzeppelin.com, https://blog.openzeppelin.com/

[^45]: MakerDAO. (2025). Emergency Shutdown: Risk management and shutdown module. docs.makerdao.com, https://docs.makerdao.com/smart-contract-modules/shutdown-module

[^46]: MakerDAO. (2025). Risk Parameters: Collateral risk assessment framework. risk.makerdao.com, https://risk.makerdao.com/

[^47]: DaiStats. (2025). DAI Peg Tracking: Real-time peg monitoring and historical data. daistats.com, https://daistats.com/ 🔷 HARD DATA

[^48]: MakerDAO. (2025). Peg Stability Module: USDC-backed peg stability mechanism. docs.makerdao.com, https://docs.makerdao.com/smart-contract-modules/psm-module

[^49]: Sky Protocol. (2025). Migration Guide: MKR/DAI to SKY/USDS optional migration. sky.money, https://sky.money/

[^50]: Chronicle Labs. (2025). Scribe Architecture: Technical oracle implementation. chroniclelabs.org, https://chroniclelabs.org/

[^51]: MakerDAO. (2025). Voting Mechanics: Continuous approval voting and hat system. docs.makerdao.com, https://docs.makerdao.com/

[^52]: Curve Finance. (2025). DAI Pools: 3pool and other DAI liquidity pools. curve.fi, https://curve.fi/ 🔷 HARD DATA

[^53]: Uniswap. (2025). DAI Pairs: DAI trading pairs and liquidity. app.uniswap.org, https://app.uniswap.org/ 🔷 HARD DATA

[^54]: L2Beat. (2025). DAI on L2: Layer 2 DAI deployment tracking. l2beat.com, https://l2beat.com/ 🔷 HARD DATA

[^55]: Dune Analytics. (2025). MakerDAO: Comprehensive on-chain analytics dashboards. dune.com, https://dune.com/SebVentures/maker---accounting_1 🔷 HARD DATA