# DAI and USDS: connected tokens in the Sky system DAI and USDS are distinct dollar-targeting tokens connected by Sky’s documented 1:1 bidirectional converter. USDS uses an upgradeable token design; sUSDS is a separate savings wrapper for USDS. Their shared protocol context includes collateral, governance and external dependencies, and a conversion to USDS is not a bank-dollar redemption. Evidence: [USDS and DAI USDS Converter](https://developers.skyeco.com/protocol/tokens/usds/); [sUSDS: Savings USDS](https://developers.skyeco.com/protocol/tokens/susds/); [Vat: Core Accounting](https://developers.skyeco.com/protocol/core/vat/); [What is USDS?](https://sky.money/blog/what-is-usds) Canonical: https://degreesofsatoshi.com/encyclopedia/dai-and-usds/ Published: 2026-10-02 Substantively modified: 2026-10-02 Independently verified by an automated reviewer: 2026-10-02T15:09:00.630Z Data current through: 2026-10-02 AI-assisted research and drafting with a separate automated source-verification pass; no external expert or named human review is implied. ## Key facts - **Converter:** The documented DAI↔USDS route converts 1:1 with no route fee; network gas is separate. ([USDS and DAI USDS Converter](https://developers.skyeco.com/protocol/tokens/usds/)) - **Savings token:** sUSDS represents a savings vault position, not plain USDS. ([sUSDS: Savings USDS](https://developers.skyeco.com/protocol/tokens/susds/)) - **Backing scope:** The June 2026 Sky description includes multiple collateral and investment categories. ([What is USDS?](https://sky.money/blog/what-is-usds)) ## A token conversion, not a dollar withdrawal Sky’s USDS developer documentation accessed on 2 October 2026 describes a DAI-USDS converter that works in both directions at a fixed 1:1 ratio without a converter fee. It also describes USDS as an ERC-20 token using an upgradeable proxy design. Those facts concern the documented route and implementation, not every third-party trading pool. Converting 100 DAI through that route yields 100 USDS before separately paid transaction costs. It changes the token held, not the wallet’s bank balance. Selling either token in a market can produce a different price, and using a bridge creates additional steps. Evidence: [USDS and DAI USDS Converter](https://developers.skyeco.com/protocol/tokens/usds/) ## Collateral accounting and governance still matter Sky’s core accounting documents track collateral, debt and authorized modules. Liquidation documentation explains the sale process for unsafe positions. The June 2026 collateral overview additionally describes stablecoin, lending and traditional-asset exposures. Describing the entire system as backed only by ETH would omit that documented scope. On-chain visibility helps inspect balances and parameters, but it does not turn off-chain investments into trustless assets. Oracle, adapter and governance permissions affect how those balances correspond to real backing. A new token name does not remove the need to follow those dependencies. Evidence: [Vat: Core Accounting](https://developers.skyeco.com/protocol/core/vat/); [Collateral Liquidation](https://developers.skyeco.com/protocol/vaults/collateral-liquidation/); [What is USDS?](https://sky.money/blog/what-is-usds) ## USDS and sUSDS answer different balance questions Sky documents sUSDS as an ERC-4626 savings implementation. A user deposits USDS and receives shares; the share-to-asset conversion describes the underlying USDS represented. Plain USDS itself is not the savings share and should not be assigned the savings rate in an article or comparison table. For example, 50 shares representing 1.02 USDS each correspond to 51 USDS before relevant conditions. This is illustrative arithmetic, not a live exchange rate. The savings rate and wider parameters can change, so a current product description needs a dated parameter check rather than a permanent yield claim. Evidence: [sUSDS: Savings USDS](https://developers.skyeco.com/protocol/tokens/susds/); [What is USDS?](https://sky.money/blog/what-is-usds) ## Questions ### Do I have to call DAI and USDS the same token? No. They are distinct tokens with a documented conversion relationship. Preserve their names and contract identities. Evidence: [USDS and DAI USDS Converter](https://developers.skyeco.com/protocol/tokens/usds/) ### Does USDS automatically earn the savings rate in a wallet? No. Sky distinguishes plain USDS from the separate sUSDS savings implementation. Evidence: [sUSDS: Savings USDS](https://developers.skyeco.com/protocol/tokens/susds/); [What is USDS?](https://sky.money/blog/what-is-usds) ## Claims and scope ### dai-and-usds-quick-answer DAI and USDS are distinct dollar-targeting tokens connected by Sky’s documented 1:1 bidirectional converter. USDS uses an upgradeable token design; sUSDS is a separate savings wrapper for USDS. Their shared protocol context includes collateral, governance and external dependencies, and a conversion to USDS is not a bank-dollar redemption. Scope: {"collection":"stablecoins","dataAsOf":"2026-10-02","blockHeight":null} ### dai-and-usds-fact-converter Converter: The documented DAI↔USDS route converts 1:1 with no route fee; network gas is separate. Scope: {"collection":"stablecoins","dataAsOf":"2026-10-02","blockHeight":null} ### dai-and-usds-fact-savings-token Savings token: sUSDS represents a savings vault position, not plain USDS. Scope: {"collection":"stablecoins","dataAsOf":"2026-10-02","blockHeight":null} ### dai-and-usds-fact-backing-scope Backing scope: The June 2026 Sky description includes multiple collateral and investment categories. Scope: {"collection":"stablecoins","dataAsOf":"2026-10-02","blockHeight":null} ## Sources - [USDS and DAI USDS Converter](https://developers.skyeco.com/protocol/tokens/usds/) — Sky Protocol. 1:1 bidirectional conversion, no route fee, upgradeable USDS token. Locator: Overview; DAI USDS Converter. Retrieved: 2026-10-02T14:38:41.077417+00:00. - [sUSDS: Savings USDS](https://developers.skyeco.com/protocol/tokens/susds/) — Sky Protocol. ERC-4626 savings wrapper distinct from USDS. Locator: Overview. Retrieved: 2026-10-02T14:38:42.003903+00:00. - [Vat: Core Accounting](https://developers.skyeco.com/protocol/core/vat/) — Sky Protocol. Collateralized issuance, debt accounting, oracle and governance dependencies. Locator: Vault Management; Failure Modes; Accounting. Retrieved: 2026-10-02T14:38:38.888971+00:00. - [What is USDS?](https://sky.money/blog/what-is-usds) — Sky.money / Skybase International. Dated 2026-06-12 description of diversified collateral and separate savings product; marketing assertions not independently audited. Locator: How USDS holds its peg; Protocol Collateral; Does USDS generate yield?. Retrieved: 2026-10-02T14:38:42.654541+00:00. - [Collateral Liquidation](https://developers.skyeco.com/protocol/vaults/collateral-liquidation/) — Sky Protocol. Liquidation via collateral sales, parameters and failure modes. Locator: Liquidation 2.0 module; Auctions. Retrieved: 2026-10-02T14:38:38.896399+00:00. ## Revision history - 2026-10-02: First publication after primary-source research and independent automated verification. ## Cite this entry Degrees of Satoshi editorial project. “DAI and USDS: connected tokens in the Sky system.” Published 2026-10-02; updated 2026-10-02. https://degreesofsatoshi.com/encyclopedia/dai-and-usds/