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Sky Protocol’s USDS Stablecoin Gets Stability Score of 4 from S&P
Sky Protocol Gets First Credit Rating in DeFi History – In a landmark moment for decentralized finance (DeFi), S&P Global Ratings has assigned a “B-” issuer credit rating to Sky Protocol, formerly known as Maker Protocol, marking the first time a major credit agency has officially rated a DeFi platform. This move reflects a growing institutional interest in evaluating the creditworthiness of crypto-based financial systems, particularly those issuing stablecoins.
USDS Peg Stability Rated “Constrained”
As part of its ongoing stablecoin assessment initiative launched in 2023, S&P also issued a stability rating of “4” (on a scale from 1 for very strong to 5 for weak) for USDS, Sky Protocol’s U.S. dollar-pegged stablecoin. The rating, labeled “constrained,” raises questions about the platform’s ability to maintain USDS’s dollar peg under stress.
The evaluation covered USDS and DAI stablecoins, as well as their savings token counterparts, sUSDS and sDAI.
Key Risks Highlighted: Centralized Governance and Weak Capital Buffer
S&P’s report pointed out several critical risks that could threaten Sky Protocol’s financial health, including:
- High depositor concentration
- Centralized governance structure, with co-founder Rune Christensen holding nearly 9% of governance tokens
- Regulatory uncertainty surrounding DeFi platforms
- A low risk-adjusted capital ratio of just 0.4%
These risks were partially offset by the platform’s minimal credit losses since 2020.
Institutional Scrutiny on Stablecoin Issuers Intensifies
Sky Protocol now joins other major stablecoin issuers like Circle (USDC) and Tether (USDT) under the microscope. USDC received a “2” (strong) rating, while both Tether and USDS were rated “4” due to issues with transparency and complex asset backing, respectively.
This rating reflects S&P’s attempt to align on-chain protocols with traditional finance (TradFi) standards, assessing not only financial resilience, but also DeFi-native risks like smart contract vulnerabilities, oracle dependencies, and bridge risks.
