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Best DeFi Protocols · Rank 02 of 8
The longest-running decentralised credit system
Last verified August 18, 20264 scored axes
Documented and independently verifiable
Sky (MakerDAO) scores 9.1 out of 10 and ranks #2 of 8 in the best defi protocols table, strongest on security record (9.4) and weakest on governance (8.4).
Has run a collateralised stablecoin through every crisis since 2017, including one that nearly broke it, and emerged with a governance process that publishes its reasoning. The pivot into real-world assets is the most consequential and most debated decision in DeFi.
4 axes, weighted as published in the table’s methodology. Each score below is read from the fact printed under it.
9.4/ 35% of the score
In production since 2017 through every crisis, including Black Thursday in March 2020, when congestion let keepers win collateral auctions at zero bids and left the system several million DAI short; the shortfall was covered by a dilutive MKR auction and the auction mechanism was rebuilt afterwards.
9.0/ 25% of the score
Revenue comes from stability fees and real-world-asset yield, both published on-chain and in governance reporting.
8.4/ 20% of the score
Governance can change collateral types, fees and the peg module through timelocked votes; voting power is concentrated among large holders and measurable on-chain.
9.2/ 20% of the score
Stability-fee income has persisted across cycles and now includes off-chain yield.
On Black Thursday in March 2020, network congestion let keepers win collateral auctions at zero bids and left the system several million DAI short. MKR was auctioned to cover the gap, diluting holders, and the auction mechanism was rebuilt. That is the sequence a credit system is supposed to be able to execute, and this is the only protocol in DeFi that has actually executed it.
Stability fees have paid across every market condition since 2017, and now real-world-asset yield sits alongside them. Both are published on-chain and in governance reporting, which makes this one of the few protocols where the income statement is a matter of record rather than estimation.
Moving a large share of backing into tokenised real-world assets reintroduced precisely the off-chain counterparty risk the protocol was built to avoid. It also produced the revenue that funds everything else. Whether that trade was right is the most consequential open argument in DeFi, and nobody will know for certain until a counterparty fails.
Collateral types, fees and the peg module are set by timelocked token votes, with participation concentrated among large holders and measurable on-chain.
In March 2020 congestion allowed keepers to win collateral auctions at zero bids, leaving the system several million DAI short. MKR was auctioned to cover the shortfall and the auction mechanism was rebuilt afterwards.
Sky is the rebranded and restructured successor to MakerDAO, running the same collateralised stablecoin system with USDS alongside DAI.
Because it reintroduces off-chain counterparty risk into a system designed to avoid it, in exchange for the yield that funds the protocol. The trade-off has not yet been tested by a counterparty failure.
8 services in best defi protocols