Maker built the mechanism everything else copied: lock collateral, mint a stablecoin against it, pay a stability fee, get liquidated if the ratio falls. Eight years later DAI has held its peg through every crisis the sector has produced, which is the strongest evidence any protocol in this category can offer.
Black Thursday and what was fixed
In March 2020 network congestion and a collapsing ETH price broke the liquidation auction: bidders could not get transactions through, and some vaults were seized for effectively nothing, leaving around $8m of bad debt. Maker recapitalised through a governance-run MKR auction and rebuilt the liquidation system with circuit breakers and a redesigned auction mechanism. It is the clearest example in DeFi of a protocol failing, being fixed, and the fix holding.
The oracle security module
Prices are delayed by an hour before taking effect, which gives governance time to react to a manipulated feed. It costs precision and it makes flash-loan oracle attacks — the most common vector against lending protocols — structurally difficult.
The real-world asset question
A large share of backing now sits in treasury exposure, real-world credit and off-chain arrangements whose counterparties users cannot inspect. That is where the yield comes from and it is a different risk from on-chain over-collateralisation. Anyone treating DAI or USDS as fully verifiable on-chain collateral should look at the current composition first.
Who should use it
Borrowers wanting deep liquidity against blue-chip collateral at scale, and users who want a stablecoin with the longest peg record in the sector — while understanding what now backs it.