"I wish for a friend." A lonely child wished to a god.

"You would love and look after them, and not betray them?" the God asked.

"I promise" the child promised, and the contract was sealed.

The god took a fragment of themselves, and fashioned a child, an avatar with no knowledge they were part of a god.

"Do not break the contract, for you will break your friend," the god warned.

Dream was born from a contract, and as all children do the child that wished his existence forgets.

It breaks, and with it Dream starts breaking as his reason for existing was fragmenting.

The real reason why dream became more and more unstable as the DreamSMP seasons went.

While hanging with George, DreamXD decides to reclaim the fragment of himself.

Everyone just protests him taking Dream from the prison, even though its there fault the contract broke.

The one that made the contract, that's up to the writer.