Question 1

What is sDAI?

Accepted Answer

sDAI (Savings DAI) is an ERC-4626 tokenized vault that wraps DAI deposits and auto-compounds the DAI Savings Rate. When you deposit DAI into the DSR contract, you receive sDAI at a 1:1 ratio. As yield accrues, your sDAI balance increases - you don't need to manually claim or re-invest.

Question 2

How does sDAI's price stay above $1?

Accepted Answer

sDAI is a yield-bearing token, not a stablecoin. Its price exceeds $1 because it represents the accumulated value of DAI deposited plus all accrued savings yield. For example, if you deposit 1,000 DAI and earn 5% APY for one year, you'll have ~1,050 sDAI, making the price ~$1.05. The longer you hold, the higher the price.

Question 3

How is the Spark savings rate determined?

Accepted Answer

The DAI Savings Rate is derived from Spark Protocol's revenue - primarily interest from Dai borrowers and fees from flash loans and perpetual spreads. Spark DAO governance sets the rate based on market conditions, aiming to attract DAI depositors while keeping borrowing costs competitive. The rate typically sits between 4-8% APY.

Question 4

How does sDAI compare to USDC savings accounts?

Accepted Answer

sDAI typically offers higher yields than centralized USDC savings accounts (which often offer 3-5%) because it captures DeFi lending revenue directly. However, sDAI carries smart contract risk (though audited) and is subject to on-chain gas fees. USDC savings are easier but yield less. For DeFi-native users, sDAI is generally superior.

Question 5

Can I use sDAI as collateral in other protocols?

Accepted Answer

Yes. sDAI is an ERC-4626 vault token, meaning it's recognized as a standard ERC-20 and can be used as collateral in lending protocols that support it - including Aave V3, Morpho, and other Spark-connected platforms. This lets you earn yield while still accessing leverage.

Question 6

What happened to DSR after MakerDAO became Sky?

Accepted Answer

The DSR remains functionally identical but is now part of the Sky ecosystem. The key changes: Spark Protocol acts as the primary interface for DSR deposits, sDAI and sUSDS are integrated across Sky's product suite, and SPK token holders have governance input on rate decisions. The rebrand brought more focus on the savings layer as a core product rather than a side feature.

How sDAI Works

DSR APY History (2024-2026)

How sDAI Accumulates Value

DSR vs USDC Savings Rates

What Funds the DSR?