Sky (formerly Maker): DAI, USDS, sUSDS and vault debt for accountants
How the DAI-USDS converter, the Sky Savings Rate and collateral vaults work, and the policy choices they force on your books.
If your treasury holds DAI, USDS or sUSDS, or has minted stablecoins against collateral in a Sky vault, you are dealing with three different things: a 1:1 token swap, a savings position whose value grows every block, and a loan. Each needs its own line in your accounting policy.
DAI and USDS: two tokens, one converter
Sky is the protocol formerly known as MakerDAO. USDS sits alongside DAI rather than replacing it outright. Sky's documentation describes a converter that swaps DAI for USDS and back at a fixed 1:1 rate, with no fee, and states that fees cannot be switched on for that route later [2]. The converter's source code is public; its README calls it a permissionless convenience contract and notes that users could reach the same result by calling the underlying join contracts directly [3].
USDS itself is a standard ERC-20 token with permit support, built on an upgradeable proxy pattern [2][3]. That upgradeability is worth recording in your token due-diligence file, because the rules governing a token you hold can change through governance.
sUSDS and the Sky Savings Rate
sUSDS is Sky's tokenised savings position for USDS. It follows the ERC-4626 vault standard: you deposit USDS and receive sUSDS shares, and you redeem shares for USDS later [1]. It does not rebase, so your share count stays fixed and the USDS value of each share rises as the savings rate accrues. Sky's documentation says no fees apply to this route and that fees cannot be enabled on it in future [1].
The documentation for the older DAI Savings Rate (DSR) shows how this kind of savings accrual works. The Pot contract holds deposits as normalised balances and uses an always-increasing accumulator, called chi, to decide how much DAI each balance is worth [4]. A function called drip updates that accumulator and funds the interest from the system's own balance sheet [4]. The rate is set by Sky governance, and the docs say it will typically sit below the base stability fee so the system stays sustainable [4]. A tokenised wrapper, sDAI, applies ERC-4626 to the DSR in the same way sUSDS does for USDS [8].
Two practical consequences follow. First, yield shows up as a change in the conversion rate, not as a transfer into your wallet, so a ledger built only from token movements will not see it. Second, the rate is variable and set by governance, so a figure quoted last quarter tells you nothing about this one. We have not stated a current rate here; read it on-chain at your measurement date.
Vaults: minting against collateral
Sky vaults let a holder lock collateral and generate DAI or USDS against it. Stability fees accrue over time through a rate accumulator, and each collateral type has a minimum collateralisation ratio [5]. If a vault falls below that ratio, the protocol liquidates it: collateral and debt move to a Dutch auction, and a liquidation penalty is added to the debt [5].
Economically, minting is borrowing. The stablecoins you receive are not income, the obligation to repay them is a liability, and the stability fee is a borrowing cost. The collateral stays your asset while it is locked, though many teams reclassify it to a pledged or restricted line so the balance sheet shows it is encumbered.
| Account | Debit | Credit |
|---|---|---|
| Deposit USDS into sUSDS 1,000,000 USDS in; shares received at the current rate | ||
| Savings position — sUSDS | 1,000,000.00 | |
| Stablecoins — USDS | 1,000,000.00 | |
| Period-end accrual (if your policy accrues) Conversion rate implies 1,018,000 USDS | ||
| Savings position — sUSDS | 18,000.00 | |
| Savings yield income | 18,000.00 | |
| Redeem all shares Shares redeemed for 1,030,000 USDS | ||
| Stablecoins — USDS | 1,030,000.00 | |
| Savings position — sUSDS | 1,018,000.00 | |
| Savings yield income | 12,000.00 | |
| Mint USDS from a vault Collateral locked; 600,000 USDS generated | ||
| Stablecoins — USDS | 600,000.00 | |
| Loan payable — Sky vault | 600,000.00 | |
| Accrue stability fee | ||
| Interest expense — stability fee | 2,500.00 | |
| Loan payable — Sky vault | 2,500.00 | |
The accounting questions to settle
- Scope under US GAAP. ASU 2023-08 fair value applies only to crypto assets that meet all of its scope criteria. Deloitte notes that some stablecoins are financial assets, and others fall outside the standard because they give enforceable rights to other assets [6]. Assess DAI, USDS and sUSDS separately; a savings share with a redemption right may land differently from the stablecoin itself.
- Conversions. A DAI to USDS swap is 1:1 and fee-free [2], so the book effect is usually nil. Decide whether you treat it as a reclassification or as a disposal and acquisition, and apply that consistently.
- Yield timing. You can recognise savings income as the rate accrues (period-end measurement of the share value) or only when you redeem. Accrual matches the economics; realisation is simpler. Whichever you pick, disclose it.
- US tax. The IRS treats exchanging one virtual currency for another as a realisation event that produces gain or loss [7]. The IRS has not, to our knowledge, addressed DAI-USDS conversions or ERC-4626 deposits specifically, so whether a deposit, conversion or redemption is a taxable exchange is unsettled. Take advice before relying on non-recognition.
- Liquidation. A vault liquidation is a disposal of collateral, a settlement of debt and a penalty. Record those three pieces separately rather than netting them into one loss.
What to do
- List every Sky position by type: plain DAI or USDS, sUSDS or sDAI shares, and open vaults with their collateral and debt.
- Read the sUSDS conversion rate on-chain at each period end and keep it as evidence for the share valuation.
- Book vault debt as a liability and accrue stability fees from the on-chain rate accumulator, not from an estimate.
- Write down your policy on conversions, yield timing and ASU 2023-08 scope, and agree it with your auditor before year end.
- Monitor collateral ratios; a liquidation needs evidence of auction proceeds and penalty to be recorded correctly.
Sources
- sUSDS (Savings USDS) | Sky Protocol Docs (Sky)
- USDS | Sky Protocol Docs (Sky)
- sky-ecosystem/usds (USDS token, UsdsJoin and DaiUsds converter) (Sky Ecosystem on GitHub)
- Pot | Sky Protocol Docs (Sky)
- Collateral Liquidation | Sky Protocol Docs (Sky)
- Frequently Asked Questions About Implementation of the FASB's New Crypto Assets Standard (Deloitte (DART Heads Up))
- Frequently asked questions on virtual currency transactions (IRS)
- sky-ecosystem/sdai (Savings DAI) (Sky Ecosystem on GitHub)
General information for finance teams, current as of publication. Not legal, tax or accounting advice.