Key Takeaways
S&P Global gives Sky Protocol, formerly Maker Protocol, a “B-” issuer credit rating — the first for a decentralized finance (DeFi) platform.
Sky’s USDS stablecoin earns a stability score of 4 (“constrained”) due to governance centralization, weak capitalization, and regulatory uncertainty.
The protocol’s risk-adjusted capital ratio stands at just 0.4%, limiting its reserve buffer for potential credit losses.
Founder Rune Christensen holds nearly 9% of governance tokens, with low voter turnout amplifying centralization concerns.
S&P also rates Circle’s USDC at 2 (strong), Tether’s USDT at 4 (constrained), and USDS at 4.
First Credit Rating for a DeFi Protocol
S&P Global Ratings has issued a “B-” issuer credit rating to Sky Protocol, marking the first time a major credit rating agency has assessed a DeFi platform. The rating covers Sky’s USDS and DAI stablecoins, along with its sUSDS and sDAI savings tokens.
USDS — the fourth-largest stablecoin with a market cap of $5.36 billion — received a stability score of 4 (“constrained”) on a 1–5 scale, where 1 represents “very strong” and 5 “weak.”
S&P said the grade reflects Sky’s ability to meet obligations under normal conditions but highlights its vulnerability to adverse market, financial, or economic events.
Key Risks Identified by S&P
S&P’s report pointed to several structural weaknesses:
High depositor concentration
Centralized governance — low voter turnout and heavy reliance on founder Rune Christensen, who controls ~9% of governance tokens
Regulatory uncertainty in the DeFi sector
Weak capitalization, with a 0.4% risk-adjusted capital ratio as of July 27
Potential default risks include sudden depositor withdrawals exceeding liquidity in the peg stability module and credit losses surpassing available capital reserves.
Minimal Losses, But Low Capital Buffers
Despite minimal credit losses and earnings stability since 2020, S&P flagged Sky’s limited surplus reserves. The protocol’s anchor rating was set at “bb”, four notches below the U.S. banking anchor of “bbb+”, due to regulatory headwinds facing DeFi platforms.
Sky’s internal risk committee said the process allowed it to examine both traditional counterparty risks and DeFi-specific threats such as smart contract, oracle, bridge, and governance vulnerabilities.
Stablecoin Issuers Under Increasing Scrutiny
S&P launched its stablecoin stability assessment in December 2023. In its latest report:
Circle USDC: 2 (“strong”)
Tether USDT: 4 (“constrained”)
Sky USDS: 4 (“constrained”)
S&P cited USDC’s higher transparency, while noting USDS’s complex asset base and weaker capital position.
Traditional Credit Ratings Meet Blockchain Finance
The move comes as more blockchain-linked institutions seek traditional credit ratings. In June, S&P assigned an “AAA” rating to Figure Technology Solutions’ $355 million blockchain-based mortgage securitization.
The rating puts Sky in speculative-grade territory, meaning its financial stability is contingent on favorable market conditions. Governance decentralization and capital strengthening will be key factors if Sky aims to improve its score in future assessments, according to Coinetelgraph.
