Stablecoins have become a critical component of the cryptocurrency ecosystem, providing price stability and reducing risk in trading and investing. For years, Tether (USDT) and USD Coin (USDC) have dominated the market, but a new contender is emerging — USDS, a coin that combines stability, decentralization, and technological innovation.
What is USDS?
USDS (United Stable Dollar System) is an ERC-20 stablecoin built on the updated Sky Protocol, which is an evolved version of the well-known Maker protocol. It can be seen as the successor to DAI, but with major improvements, including:
- Enhanced functionality
- Multi-chain integration via Skylink
- Decentralized appeals system
- Asset freezing through community governance
Unlike centralized stablecoins like USDT — which are issued and controlled by Tether Limited — USDS offers decentralized governance and risk management through DAO mechanisms.
Technical Features of USDS
| USDS | Comparison with DAI | |
| Basic technology | Sky protocol with Skylink integration for multi-chain operation. | Powered by Ethereum, limited support for other blockchains. |
| Multichain support | Support for multiple blockchains including Layer 1 and Layer 2 (Ethereum, BNB Chain, Polygon). | Support for the most part is Ethereum only. |
| Asset freeze | Ability to freeze assets through decentralized management, activated by committee decision. | Not available |
| Appeal process | Through a decentralized commission, the ability to submit requests to unfreeze assets. | Absent for lack of use. |
| Transaction Costs (Gas Fees) | Reduced transaction costs due to Skylink's integration with Layer 2 blockchains. | High costs due to scalability limitations on Ethereum. |
| Transaction speed | Supports up to 1500 TPS (transactions per second) on Layer 2 blockchains. | The average is 14 TPS on Ethereum. |
| Decentralized Administration (DAO) | Implement a voting mechanism via Sky DAO to decide on changes to the protocol. | There is no separate voting mechanism for key decisions. |
| Stability of the USD peg | Binding via cryptoasset reserves, the guarantee pool is 1:1 USDT/USDC for each USDS in circulation. | Binding through deposit contracts, less flexibility in adjusting reserves. |
| Network scalability | Support scalability up to 10,000 users on each blockchain thanks to the multichain architecture. | Limited scalability, especially during peak times. |
| Protocol security | Two-step transaction validation, including KYC for high volumes and automatic anomaly monitoring. | Basic checks only, with no integration of additional security layers. |
| Reserves and liquidity | More than 70% of assets are backed by reserves in USDT, USDC and BUSD. | Utilization of internal reserves only, without attracting external assets. |
| Accessibility and wallet support | It is supported by over 20 cryptocurrency wallets as an ERC-20 token. | Available in EVM-enabled wallets (MetaMask, Trustee Wallet, etc.). |
How Is USDS Related to DAI?
USDS and DAI are closely related stablecoins developed by the same team but with different technical approaches and functionalities. Both coins are based on the Sky Protocol (formerly MakerDAO), which ensures price stability and value control.
Technical Architecture and Collateral Mechanism of USDS vs DAI
DAI is a stablecoin issued through deposits of crypto assets like ETH or other tokens into special smart contracts known as Vaults. Each minted DAI is overcollateralized (e.g., 1 DAI may require collateral worth 1.5 ETH) to ensure price stability and protect against market volatility.
USDS retains the core collateral mechanism but introduces additional elements:
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Multi-currency reserve pools
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Skylink protocol integration
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Decentralized appeals mechanism for asset unfreezing
Integration Example: DAI vs USDS
Imagine a user wants to use DAI on the Polygon blockchain to transact or invest in DeFi platforms. They would need to bridge their tokens from Ethereum to Polygon, which includes:
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High transaction costs (gas fees)
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Wait times (up to 20 minutes or more)
With USDS, thanks to Skylink integration, there’s no need for token bridging. The user can transact on any supported blockchain, and the protocol automatically synchronizes balances across all platforms. This drastically reduces gas fees and transaction time, making it nearly instantaneous.
USDS Wallet Compatibility
USDS is an ERC-20 token, making it compatible with any wallet that supports the Ethereum blockchain, including:
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MetaMask
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MyEtherWallet
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Ledger
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Trezor
Thanks to Skylink, USDS is also accessible on multiple blockchains, allowing use with wallets that support networks like BNB Chain, Polygon, and others — enabling true multi-chain accessibility.
How to Buy, Exchange, and Sell USDS
USDS transactions follow the same steps as with other ERC-20 tokens.
Step-by-step guide for beginners:
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Create a crypto wallet that supports ERC-20 (e.g., MetaMask or Trustee Wallet).
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Visit a decentralized exchange (DEX) and connect your wallet.
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Search for USDS and select the token for buying, selling, or swapping.
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Enter the amount of USDS you want to buy or sell. Confirm the transaction and pay the gas fee.
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After a short processing time, the USDS tokens will appear in your wallet.
USDS Outlook and Future Potential
Thanks to its innovative features — including decentralized asset freezing, community appeals, and multi-chain integration — USDS has the potential to become a leader among stablecoins in the crypto market. In the long run, USDS could reshape the way stablecoins are used, offering not just price stability but enhanced transparency, efficiency, and security for users.
