sUSDS — Risk Report

Moderate-low risk · 7.0/10

Live data: sUSDS Backing Dashboard — hourly peg, liquidity depth, NAV accrual, and sUSDS/USDS coverage from two independent reads, with the dependency chain through to USDS shown alongside. The collateral look-through behind that USDS layer is on its dashboard — this report covers the wrapper; what ultimately backs it sits one link upstream.

The permissionless one. Of the on-chain ways to earn a Treasury-style yield on dollars, sUSDS is the one with no KYC, no geographic gate, no minimum, and no lockup — anyone can hold, transfer, and redeem it instantly. That accessibility, deep liquidity, and a battle-tested codebase are what make it the most usable option in its category. The main caveats are USDS’s upgradeable contract, its 35.95% raw-USDC concentration, and allocator concentration: Spark directly holds ~$1.050B of sUSDS, a reflexive claim on USDS rather than independent backing. Its score is set equal to the USDS dollar it wraps, not above it.

Yield (current)	Exit method	Primary redemption	Age	Chains
around 3.75% APY (variable)	Sell on a DEX, or redeem	Instant, atomic: sUSDS → USDS → USDC	sUSDS since Sept 2024; mechanism battle-tested since 2019	Ethereum + Base / Optimism / Arbitrum (+ Solana)

Summary

sUSDS is the savings token of Sky Protocol — the rebranded MakerDAO, the team behind DAI. You deposit USDS (Sky’s stablecoin, a successor to DAI that converts 1:1 with it) and receive sUSDS, an ERC-4626 vault share whose redemption value rises over time as it accrues the Sky Savings Rate (SSR), currently around 3.75% APY.

The reason sUSDS matters for a retail holder is access. It is a DeFi savings position, not a securities wrapper: no KYC, no allowlist, no non-US restriction, no minimum, no waiting period. The vault currently reports $4.835B of USDS assets, with deep on-chain liquidity and near-frictionless exit at fair value under normal conditions.

Three things hold the score at 7.0 rather than higher: USDS is upgradeable with a governance-addable freeze function; 35.95% of supply is raw USDC; and nearly half of Sky vat debt sits with Spark and Grove, including a large reflexive sUSDS position inside Spark.

A note on why this is 7.0. sUSDS cannot rank above the 7.0 we publish for USDS, the dollar it wraps: its entire value is a claim on USDS, so every risk in that report is also a risk here. The correct treatment is equal, not lower — the ERC-4626 wrapper sits on the same battle-tested codebase and adds no material risk of its own. If USDS re-rates in either direction, expect this to move with it.

1 · Stability — 9.0

Reference: NAV. sUSDS pays yield by appreciating against USDS — there is no rebasing and nothing to claim. Your balance stays constant while each sUSDS becomes redeemable for slightly more USDS. The redemption value only climbs, so there is no meaningful price volatility at this layer.

The one path to a drawdown here is a USDS depeg, which is a question about collateral rather than about this vault — axes 2 and 4.

The latest reconciliation is tight: sUSDS reports $4.835B of USDS assets, while the vault balance is only $205.86 lower (-0.000004%), consistent with read/accrual timing. sUSDS now represents 69.51% of Ethereum USDS supply.

What you actually earn, and the two things to understand about the rate:

⚠️ It is variable and governance-set. The SSR is not a market rate or a fixed contract term — Sky (SKY-token) governance sets it and can raise or cut it. It broadly tracks prevailing short-term dollar rates and Sky’s own revenue. Do not underwrite a position on the current number persisting.
It is funded by diversified backing, not a single fund, with a protocol surplus buffer absorbing the gap when revenue runs below the rate being paid. What that backing consists of is axis 2; how concentrated it is, axis 4.

2 · Backing — 6.0

The reserve is USDS’s, inherited whole. sUSDS holds USDS and nothing else, so a claim here is worth what USDS is backed by. As of mid-2026 that book is:

Component	Share
Stablecoins	51.04%	Includes 35.95% raw USDC and $4.134B in LitePSM exit inventory
On-chain crypto lending	28.23%	Largest non-stablecoin look-through category
OTC lending + AAA corporate debt	15.23%	Less transparent credit and counterparty exposure
Treasury bills + other	5.50%	T-bills, private credit, basis trade and smaller sleeves

This diversification is a genuine strength versus any product backed by one off-chain fund. Short-term Treasuries, heavily overcollateralized crypto loans, and cash — well above the STRC-backed yield wrappers.

⚠️ The axis is 6.0, inherited from USDS rather than judged separately — the same reserve, so the same score. A wrapper cannot hold better collateral than the asset whose collateral it is. Spark’s direct 943.3M-share sUSDS position, worth ~$1.050B, is especially important here: it is a recursive claim on USDS, not a new asset backing sUSDS or USDS.

3 · Liquidity & Exit — 8.5

Both exit paths, and the axis takes the worse one. Here they agree, and this is the asset’s strongest dimension.

Primary redemption — instant, atomic, permissionless. Redeem sUSDS → USDS in the vault at any time, then USDS → USDC 1:1 through the Peg Stability Module. No cooldown, no redemption fee, no gatekeeper, no fiat rails, no KYC, no minimum. Getting in is the same: deposit USDS at sky.money or through Spark, or swap USDC → USDS 1:1 through the PSM first.

Secondary — deepest in its category. The vault reports about $4.835B of assets, with deep permissionless DEX liquidity plus 1:1 USDS↔DAI convertibility. No KYC or geographic gate on either path.

⚠️ The one thing to watch on exit is PSM USDC liquidity under extreme stress. The 1:1 USDS↔USDC swap depends on USDC sitting in the module; in a severe USDC-specific crisis that liquidity could be drawn down and the clean 1:1 exit would lean on the DEX market instead. A tail consideration, not a normal-conditions concern — and the reason this is 8.5 rather than a perfect score, alongside a small reservation for cross-chain reliance on the Spark PSM off Ethereum.

4 · Dependencies — 6.5

⚠️ 100% of this asset’s value passes through one other asset, and within that asset a third sits in a single name.

Two concentrations, and the second is the one most readers get wrong:

1. The whole position depends on USDS. There is no diversification at this layer and none is possible. Every risk in the USDS report is a risk here.

2. ⚠️ 35.95% of USDS supply is raw USDC, so sUSDS is correlated to USDC—not diversified away from it. The LitePSM holds $4.134B at a fixed 1:1 swap, with further USDC-denominated exposure inside allocator deployments. That is excellent for redemption liquidity and it is exactly what makes axis 3 strong—the two are the same fact read from opposite ends.

The precedent is March 2023: when USDC briefly depegged during the Silicon Valley Bank failure, DAI followed it down because of heavy USDC backing through the same kind of module. ⚠️ So treat sUSDS as roughly “two-thirds diversified collateral plus one-third USDC”, not as something safer than USDC. If you already hold a lot of USDC elsewhere, this adds to that exposure rather than diversifying it.

3. Allocator concentration is now 48.41% across Spark and Grove. Their vat-debt shares are 33.51% and 14.91%. Spark also holds about $1.050B of sUSDS directly. That balance helps reconcile Spark’s $3.853B allocator debt with BlockAnalitica’s $3.094B external-principal look-through, but it is reflexive exposure—not external backing. The remaining +$290.5M is unattributed and must not be read as profit, surplus or extra collateral.

The axis sits at 6.5. The dependencies are generally high quality, but they are concentrated, and part of the largest allocator’s position loops back into the same asset whose backing is being assessed.

5 · Contract & Admin — 7.0

The contracts are the lowest-risk part of the story. sUSDS is a standard ERC-4626 vault on Ethereum at 0xa3931d71877c0e7a3148cb7eb4463524fec27fbd, with native deployments on Base (0x5875eee1…), Optimism (0xb5b2dc7f…) and Arbitrum (0xddb46999…), plus Solana. The savings module, PSM and vault all descend from MakerDAO’s codebase, live and heavily audited since 2017, with the savings-rate mechanism specifically running since 2019 as the DAI Savings Rate and sDAI. It has been battle-tested through Black Thursday in March 2020 and the March 2023 USDC depeg. There are no known unresolved contract vulnerabilities in the savings / PSM / vault path.

⚠️ The binding concern is not code — it is that USDS is upgradeable, and a freeze function is governance-addable. When MakerDAO rebranded to Sky, USDS shipped without a freeze function but with the upgrade machinery that would let governance add an address-level freeze / blacklist later by vote. DAI, by contrast, remains immutable and unfreezable. It is governance-gated — a public vote and a timelock delay, not a unilateral flip — and no freeze function is enabled as of this writing. But if you specifically need a censorship-resistant position, hold DAI instead.

Sky governance also sets the savings rate, changes collateral parameters and executes upgrades through spells passing a security-module timelock. ⚠️ Re-verified 2026-08-25: the GSM delay reads 172,800 seconds — 48 hours — with owner() at zero, and plot() and drop() answer to the same DSAuth authority. That is notice, not interruption: no independent party can cancel a queued action inside the window. A malicious or captured governance spell is the tail risk; the delay and the track record are the mitigants.

For sizing, prefer the canonical Ethereum deployment. Balances on Base / Optimism / Arbitrum / Solana add a bridging and cross-chain-PSM dependency on top of the base vault.

6 · Issuer — 7.0

Sky Protocol (formerly MakerDAO) — and ⚠️ the issuer surface here is identical to USDS’s, because sUSDS and USDS are the same legal entity. A holder’s ultimate claim is against Sky either way, which is why this axis carries the same 7.0 as the USDS report.

In its favour: DAO-governed with a public forum and on-chain votes, one of the longest track records in DeFi, audits across many engagements, and a $10M bug bounty.

Against, and these are what dock it from higher:

⚠️ The 48-hour GSM timelock is notice rather than interruption — schedule and cancel answer to the same authority (axis 5).
The upgradeable, freezable contract is a governance decision rather than a fixed guarantee.
“Endgame” structural complexity — the multi-Star / subDAO structure, which includes Spark, is materially harder for a holder to reason about than a single governance body.
Governance-capture tail risk, mitigated by the timelock and the track record but not eliminated.

Who it’s for

Holders who want a simple, liquid, permissionless way to earn a roughly money-market-style yield on dollars on-chain, who value instant no-questions-asked exit, and who accept (a) that the underlying USDS dollar is governed and upgradeable rather than immutable, and (b) that they are taking on USDC correlation in exchange for that liquidity. It is the natural choice when access or jurisdiction rules out the gated tokenized-fund products.

Who should avoid

Anyone who needs a censorship-resistant, immutable dollar — USDS is upgradeable and a freeze function is governance-addable; hold DAI instead (axis 5).
Anyone trying to diversify away from USDC — sUSDS is correlated to USDC, not independent of it (axis 4).
Anyone underwriting a fixed return — the Sky Savings Rate is variable and can be cut by governance (axis 1).

What to watch

Sky governance: freeze-function activation. A future spell could enable address-level freezing; if that ships, the structural and censorship picture changes. Track the Sky governance forum (axis 5).
The Sky Savings Rate. Around 3.75% now and governance-set — watch for rate-change votes (axis 1).
USDC. Because USDS holds significant USDC backing, a USDC depeg is the main path to an sUSDS depeg. A USDC wobble is your early-warning signal (axis 4).
USDS backing composition. The share held in USDC versus Treasuries and crypto collateral shifts over time; a rising USDC share means rising correlation (axes 2 and 4).
Cross-chain PSM health if you hold sUSDS on Base / Optimism / Arbitrum / Solana rather than Ethereum (axis 5).

This report is based on Sky Protocol’s public documentation, Spark documentation, BlockAnalitica look-through data, public reporting on the USDS freeze-function debate, and on-chain reads of the sUSDS vault and Spark ALM proxy through 2026-10-13. The Sky Savings Rate is governance-set and subject to change, and USDS’s upgrade/freeze capability is a governance decision, not a fixed contract guarantee. Corrections, attestation links, or additional disclosures welcome at info@tidresearch.com.

Revision history

2026-10-13 — vault and USDS backing snapshot refreshed; scores unchanged. sUSDS assets are $4.835B USDS, vault reconciliation is -$205.86 (-0.000004%), and sUSDS is 69.51% of Ethereum USDS supply. Inherited USDS figures now show 35.95% raw USDC, $4.134B LitePSM USDC, and 48.41% combined Spark/Grove vat debt. Spark’s ~$1.050B direct sUSDS position is explicitly treated as recursive exposure, not independent backing; the +$290.5M residual remains unattributed.
2026-08-25 — admin path re-verified; no score change. The GSM delay reads 172,800 seconds — 48 hours — with owner() at zero, and ⚠️ plot() and drop() answer to the same DSAuth authority, so there is no independent canceller.
2026-08-18 — Overall held at 7.5, level with USDS rather than above it, since a wrapper cannot outrank the dollar it wraps.
2026-07-09 — collateral model refreshed. Star-allocator system about 52%, crypto CDPs about 7%.

2026-09-24 (later) — Backing 6.5 → 6.0. A condition set earlier the same day has been met, on our own reading of Block Analitica’s public Sky endpoint rather than a second-hand figure (150 items, as-of 2026-09-24T02:20). Spark — the allocator that has grown fastest and now holds a third of the book — is 61.2% on-chain crypto lending, 30.7% stablecoins, 7.4% over-the-counter lending, and holds no tokenized-treasury sleeve at all.

Two corrections to the earlier note are worth making rather than quietly dropping. Grove is less treasury-weighted than it first appeared — 29.3% AAA corporate debt and 25.3% short-duration T-bills, but also 24.3% OTC and 16.5% on-chain lending — so the shift between the two allocators is milder than stated, and this change rests on Spark’s own composition rather than on that contrast. And Obex, a smaller allocator, is 99.2% OTC crypto lending, a concentration not previously described here.

A note on arithmetic for anyone checking: Block Analitica’s “backed” figure and the protocol’s on-chain vault debt are 23.7% apart for Spark, so the percentages above and the 33% share are on different bases and must not be multiplied together.

2026-09-24 — Backing 7.0 → 6.5, Dependencies 7.0 → 6.5, Overall 7.5 → 7.0. Sky’s allocator mix has concentrated. Measured from the protocol’s own ilk registry on 2026-09-24 against the same reading on 2026-08-01: Spark has gone from 21.66% to 33.01% of Sky’s total vault debt and has overtaken Grove, which fell from 25.05% to 15.34%. Obex was flat to within $4 million across both dates, which is what establishes the two readings are comparable. So roughly 48% of the backing now sits with two Star allocators rather than being spread across three, and the largest of them has grown by more than half in seven weeks.

Two further things are worth stating plainly. Grove operates two allocator vaults, and the larger one is named ALLOCATOR-BLOOM-A — sizing Grove by the vault that carries its own name understates it by about 24 times, which is a trap for anyone reading the registry directly. And the largest single holding inside Spark’s allocation is $647 million of sUSDS, while Grove lends against sUSDS at up to 96.5% loan-to-value — meaning part of what backs USDS is a claim on USDS. The positions and their sizes are measured; whether the protocol’s published backing figures net that circularity out is not established here, and the score change does not depend on it.

Stability, Liquidity & Exit, Contract & Admin and Issuer are unchanged — this review did not re-examine them.

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