Trust Score pending calculation
Key Facts
- Peg Currency
- USD
- Backing Type
- Crypto Collateralized
- Audit Frequency
- None
- Reserve Ratio
- N/A
Global Regulatory Status
Reserve & Custody
Reserve Custodians
MIP65 implementation providing $500M+ US Treasury exposure via Jersey-based SPV structure. Institutional custody of Treasury securities. Governance-controlled allocation. Represents ~25% of USDS collateral. Jurisdictional risk: Jersey is a Crown dependency with separate legal system; bankruptcy proceedings may differ from UK mainland.
Delaware statutory trust structure providing enhanced yield via institutional credit strategies. Investment-grade focus with yield optimization. Part of RWA collateral allocation (~25% total). Delaware trust law provides legal clarity but trust structure creates counterparty dependency on BlockTower as trustee/manager.
Reserve Attestation
No attestation data available
This stablecoin does not publish regular reserve attestations.
On-chain verification available:
Redemption
- Direct Redemption
- No
- No direct issuer redemption
- Exit via DEX or secondary markets
Chain Support
Historical Timeline
5 events from 2024 to 2024
2024
ChainSecurity
Full_audit→ December 15, 2024
December 2024 audit of Endgame Toolkit deployment scripts and Sky transition components. Reviewed token migration contracts, farming contracts, and governance modules.
Cantina
Full_audit→ November 30, 2024
Crowdsourced security researcher competition for Sky transition components. Code4rena model with diverse attacker perspective and severity-based rewards.
Absence of Independent Reserve Attestation Reports
According to comprehensive research conducted February 2026, no independent CPA or auditor attestation reports have been identified for USDS reserves. Unlike USDC (monthly Grant Thornton attestations) and USDT (quarterly BDO Italia attestations), USDS relies solely on issuer-maintained on-chain dashboards (makerburn.com, daistats.com, info.sky.money) for collateral verification. This absence represents a material due diligence limitation and a gap versus institutional standards for reserve transparency. The DAO structure complicates attestation requirements as there is no single legal entity to engage auditors.
ongoingUSDS Freeze Function Discovery - Governance Censorship Capability
According to community research in August 2024, USDS (Sky Protocol's successor to DAI) contains a governance-activatable freeze function that can blacklist addresses. The discovery triggered significant controversy about protocol decentralization. The freeze function is defended as necessary for Real World Asset (RWA) regulatory compliance.
Freeze Function Discovery and Community Controversy
According to community research and social media discourse from August 2024, USDS (then newly launched) contained a governance-activatable freeze function that could blacklist addresses. The discovery triggered significant community alarm regarding protocol decentralization. Rune Christensen defended the function as necessary for Real World Asset (RWA) collateralization and Treasury yield access, stating 'future governance can decide how to implement similar freezing functions based on considering all data.' The freeze function represents a fundamental departure from the censorship-resistant ethos that originally defined DAI.
ongoingFinancial Incidents
1 incident recordedUSDS Freeze Function Discovery - Governance Censorship Capability
HighAugust 15, 2024
According to community research in August 2024, USDS (Sky Protocol's successor to DAI) contains a governance-activatable freeze function that can blacklist addresses. The discovery triggered significant controversy about protocol decentralization. The freeze function is defended as necessary for Real World Asset (RWA) regulatory compliance.
0Details
In August 2024, community researchers discovered that the newly launched USDS token contract included a freeze/blacklist function that could be activated by governance to prevent specific addresses from transferring tokens. The discovery caused significant alarm in the DeFi community, with prominent voices arguing this represented a fundamental departure from the censorship-resistant ethos that originally defined DAI. Rune Christensen, founder of MakerDAO/Sky Protocol, defended the freeze function as necessary to access Real World Asset (RWA) yields and Treasury exposure, which require compliance with sanctions lists and regulatory requirements. According to Christensen's statements, 'future governance can decide how to implement similar freezing functions based on considering all data.' The controversy highlighted a central tension in the protocol's evolution: traditional finance integration requires regulatory compliance mechanisms (freezing), while the crypto-native user base values censorship resistance. The freeze function remains active and available for governance activation as of February 2026, creating ongoing uncertainty for institutional users about address-level risk.
Customer Impact
All USDS holders are subject to potential address freezing if governance activates the function. Creates uncertainty for institutional users regarding censorship risk. No direct financial losses occurred, but reputational damage and user migration to alternative stablecoins reported.
Issuer Response
Sky Protocol leadership defended freeze function as necessary for RWA integration and Treasury yield access. No commitment to remove function. Governance retains ability to activate freezing at any time. RWA partnerships (Monetalis Clydesdale, BlockTower) continue to depend on compliance capabilities.
Sources
Banking Relationships
3 active, 0 terminated
Active Relationships
Monetalis Clydesdale (Jersey SPV)
ActiveMIP65 implementation providing $500M+ US Treasury exposure via Jersey-based SPV structure. Institutional custody of Treasury securities. Governance-controlled allocation. Represents ~25% of USDS collateral. Jurisdictional risk: Jersey is a Crown dependency with separate legal system; bankruptcy proceedings may differ from UK mainland.
BlockTower Andromeda (Delaware Trust)
ActiveDelaware statutory trust structure providing enhanced yield via institutional credit strategies. Investment-grade focus with yield optimization. Part of RWA collateral allocation (~25% total). Delaware trust law provides legal clarity but trust structure creates counterparty dependency on BlockTower as trustee/manager.
Centrifuge Partnership
ActiveTokenized real-world asset infrastructure partnership. Enables invoice financing and trade receivables as collateral. German-based protocol with governance integration into MakerDAO/Sky. Adds operational complexity and jurisdiction risk (German/EU regulatory framework applies to Centrifuge operations).
Audit History
ChainSecurity
November 1, 2024 → December 15, 2024
December 2024 audit of Endgame Toolkit deployment scripts and Sky transition components. Reviewed token migration contracts, farming contracts, and governance modules.
- • Farming contracts owned by EOA during deployment phase (ownership transfer to PauseProxy required for production)
- • RWA oracle integration complexity may exceed audit coverage
- • SubDAO cross-contract interaction patterns not fully scoped
- • Governance AI tools (Phase 3) lack precedent for evaluation
Change reason: Pre-launch security review for Sky Protocol transition from MakerDAO
Cantina
October 1, 2024 → November 30, 2024
Crowdsourced security researcher competition for Sky transition components. Code4rena model with diverse attacker perspective and severity-based rewards.
- • Competitive audits rely on researcher participation levels
- • No guarantee of exhaustive coverage
- • Severity scoring may not capture all risk categories
- • Smart contract interactions with external protocols not fully tested
Change reason: Diverse security researcher community engagement to complement traditional audits
Historical Controversies
According to community research and social media discourse from August 2024, USDS (then newly launched) contained a governance-activatable freeze function that could blacklist addresses. The discovery triggered significant community alarm regarding protocol decentralization. Rune Christensen defended the function as necessary for Real World Asset (RWA) collateralization and Treasury yield access, stating 'future governance can decide how to implement similar freezing functions based on considering all data.' The freeze function represents a fundamental departure from the censorship-resistant ethos that originally defined DAI.
According to comprehensive research conducted February 2026, no independent CPA or auditor attestation reports have been identified for USDS reserves. Unlike USDC (monthly Grant Thornton attestations) and USDT (quarterly BDO Italia attestations), USDS relies solely on issuer-maintained on-chain dashboards (makerburn.com, daistats.com, info.sky.money) for collateral verification. This absence represents a material due diligence limitation and a gap versus institutional standards for reserve transparency. The DAO structure complicates attestation requirements as there is no single legal entity to engage auditors.
Related Stablecoins
Issuer
- Sky Protocol(unclear • DAO)
- Monetalis Clydesdale(je • Jersey SPV)
- BlockTower Andromeda(us • Delaware Statutory Trust)
- Centrifuge Partnership(de • Tokenized RWA Infrastructure)
Links
Data Sources
- According toGENIUS Act - Guidance and Establishment of National Innovation for US Stablecoins Act (Public Law 119-27)as of July 18, 2025[archive]