- S&P Global gave decentralised finance platform Sky a B- credit rating, treating it as speculative or “junk” grade.
- This marks the first time a DeFi protocol has received a credit rating from a major agency.
- The rating puts Sky’s USDS and DAI stablecoins on par with government bonds from the Democratic Republic of the Congo.
- S&P Global cited risks like reliance on the protocol’s co-founder, concentrated depositors, and regulatory uncertainty.
- The agency noted Sky’s strong track record but does not expect a rating upgrade within the next year.
S&P Global has rated Sky, a leading decentralised finance (DeFi) lender, with a B- credit score, classifying it similar to “junk bonds.” The agency released this rating on Thursday, evaluating Sky’s USDS and DAI stablecoins as on par with bonds from countries like the Democratic Republic of the Congo.
According to S&P Global, a B- rating means the protocol has capacity to meet financial commitments but remains vulnerable to challenging business conditions. Assets in this grade are considered speculative investments. Analysts gave the protocol a stable outlook but listed factors such as high depositor concentration, reliance on co-founder Rune Christensen, and unclear regulatory oversight as key risks.
“It was done to kick off the process of interacting with traditional financial institutions, and will be a continuous process where the rating can increase as tradfi rating agencies learn more about DeFi and Sky,” Christensen told DL News. Earlier, on X, a governance liaison for GFX Labs stated: “B- is deep in junk territory, implying S&P assigns a greater than 12% chance of default within 3 years.” The rating was also described as a major step for DeFi, showing that decentralised protocols are being assessed by significant traditional agencies, according to Hasu, an analyst at Steakhouse Financial.
Sky, formerly known as MakerDAO, operates on Ethereum. It issues USDS and DAI stablecoins when users deposit cryptocurrency as collateral. The platform allows users to earn interest, similar to traditional bank savings, and has about $7.9 billion worth of USDS and DAI in circulation, making it the fourth largest stablecoin provider. The S&P assessment covers Sky’s stablecoins and their associated savings tokens but does not include the governance token.
The report also highlighted risks: possible cyber attacks linked to smart contracts, governance that remains centralised due to the co-founder’s influence, exposure of $950 million to the Ethena USDe token, and the small number of large depositors. S&P said that improvements in decentralisation or depositor diversification may help increase the rating in the future, but an upgrade is unlikely in the next year.
Other companies in the crypto sector have received similar B- ratings from S&P Global, including the Bitcoin treasury company, Strategy, and Compound Prime LLC.
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