Crypto Newbie / Simulators / MakerDAO Vault + DSR
MakerDAO Vault + DSR Simulator
MakerDAO is the protocol behind DAI — the largest decentralized stablecoin and one of DeFi's foundational primitives. You can: (1) Lock collateral (ETH, WBTC, USDC, real-world bonds), borrow DAI against it, pay a stability fee on the debt. (2) Hold DAI in the DSR module to earn interest funded by stability fees + RWA bond yields. This simulator runs both sides — vault metrics, liquidation prices, the borrow-and-deposit carry trade. Maker's RWA strategy (tokenized US Treasuries) is why DSR can offer 8-12% APR while remaining decentralized.
Maker vault
Vault metrics
Collateral value
$35.0k
Loan-to-Value (LTV)
42.86%
Max debt at current collateral
$24.1k
Health factor
1.61
Liquidation price (when collateral drops to this, you're liquidated)
$2175.00
Stability fee paid over period
-$1.5k
Liquidation penalty if triggered
-$1.9k
DSR (DAI Savings Rate)
Interest earned
+$1.0k
Total DAI after period
$11.0k
Borrow-and-save carry trade analysis
Net interest rate spread (DSR - stability fee)
+0.00%
Net annual interest on debt
+$0.00
Carry trade verdict
✗ Unprofitable — DSR rate is below stability fee
Vault basics — collateral, debt, stability fee
A Maker vault is a smart contract that holds your collateral and tracks your DAI debt. The simulator's 'Liquidation price' is the critical metric: when your collateral price falls to this value, your vault is automatically liquidated. Example: 10 ETH at $3500 = $35,000 collateral. You mint $15,000 DAI. Liquidation ratio is 145% (collateral / debt ≥ 1.45). Liquidation price = $15,000 × 1.45 / 10 = $2,175. If ETH drops below $2,175, your vault gets liquidated, you lose 13% penalty. Healthy vaults maintain LTV well below 50%.
DSR — how DAI Savings Rate works
DSR is a module where you deposit DAI and earn interest. The interest rate is set by Maker governance based on protocol revenue. Currently funded by: (1) Stability fees from vaults (e.g., 10% on $1B in ETH vaults = $100M/year). (2) RWA bonds (Maker holds $1B+ in tokenized US Treasuries earning 4-5%, contributing $50M+/year). (3) PSM module fees. Total revenue is distributed to DSR depositors (after operational costs). DSR APR varies — 5% in 2023, 15% in early 2024, ~10% in 2024. The mechanism is structurally similar to a money-market fund.
Carry trade — borrow DAI, deposit in DSR
When DSR > stability fee, you can profit by borrowing DAI from a vault and depositing it into DSR. Example: ETH vault at 10% SF, DSR at 12%. Net = 2% APR on your debt. With $100k debt, that's $2,000/year free money (minus gas). The catch: you're using leverage. If ETH price drops, your vault could be liquidated even though the carry is profitable. Carry trades work best with LST collateral (stETH earns staking yield while you borrow against it). Always maintain a buffer above liquidation price.
Why MakerDAO matters more than its size suggests
MakerDAO is a $5B protocol, much smaller than centralized stablecoins ($150B+ combined). But it pioneered: (1) Crypto-collateralized stablecoins — the original DAI model. (2) On-chain treasury management — Maker holds $5B in diversified assets, governed entirely by token voters. (3) Real-World Asset integration — first major DeFi protocol to hold tokenized real assets at scale. (4) Decentralized governance evolution — Endgame plan splits Maker into subDAOs. Even though USDC is larger, MakerDAO's design influences every modern stablecoin attempt.
Frequently asked questions
+What's the difference between DAI, USDS, and Sky?
Same protocol, evolving brand. Original launch (2017): MKR governance token, DAI stablecoin. 2024 rebrand: SKY governance token (1 MKR = 24,000 SKY), USDS stablecoin (functionally equivalent to DAI, 1:1 redeemable). The brand pivot was driven by the Endgame plan to evolve the protocol into modular subDAOs. DAI still exists and works (1:1 with USDS) — most users haven't migrated and probably won't unless they want SKY governance. For practical purposes, DAI = USDS.
+Why does DSR offer such high yields compared to centralized savings?
Because DSR captures yield from multiple sources: (1) Vault stability fees (people pay to borrow DAI, you earn). (2) RWA bonds (tokenized US Treasuries earning the risk-free rate). (3) PSM trading fees. Together this can fund 10-15% APR distributions. Compare to a bank savings account: banks borrow at 0% from depositors, lend at 8-10%, keep the spread. DSR cuts out the bank middleman and gives the spread to depositors. The price: you're trusting Maker governance + smart contracts instead of a bank's FDIC insurance.
+Can MakerDAO collapse like UST/LUNA did?
Unlikely — different mechanism. UST was algorithmic (no real backing, depended on LUNA market cap). DAI is OVER-COLLATERALIZED — each $1 of DAI is backed by $1.45+ of collateral. In a market crash, vaults get liquidated; if liquidations happen too fast, MKR is minted and sold to recapitalize the system (this happened in March 2020 Black Thursday). The mechanism survived multiple stress tests. The real risks: (1) Smart contract bugs. (2) Oracle manipulation. (3) Governance attack on MKR. (4) USDC depeg (Maker holds significant USDC). Not impossible to fail, but much more resilient than UST.
+Should I use Maker vault or just borrow from Aave?
Depends on rate environment and use case. Maker pros: very battle-tested, no liquidator priority queue (you have time), RWA collateral options. Aave pros: more collateral types, variable rate (sometimes cheaper), better UX, can borrow other tokens not just stables. Most institutional users prefer Maker for large positions due to its conservative liquidation mechanics. Retail users often prefer Aave for the UX. For DAI specifically, Maker often has the cheapest stability fees in DeFi (sometimes 0% for USDC-backed via PSM).
+What's the PSM (Peg Stability Module)?
PSM is a special Maker module that swaps DAI ↔ USDC at exactly 1:1 with zero slippage. It exists to maintain DAI's peg — if DAI trades above $1, arbitrageurs deposit USDC into PSM, mint DAI, sell on market. If below $1, they buy DAI cheap, redeem PSM for USDC. As a side effect, ~30-50% of DAI's backing is now USDC. This is a sometimes-controversial centralization risk (if USDC depegged, DAI would have a problem), but it's been key to maintaining tight peg through volatile periods.