In a historic move for the decentralised finance (DeFi) sector, S&P Global Ratings has issued a ‘B-’ credit rating with a stable outlook to Sky Protocol, formerly known as Maker Protocol. This marks the first time a major credit rating agency has rated a DeFi protocol, signalling a growing recognition of decentralised systems within traditional financial frameworks.
Sky Protocol operates on the Ethereum blockchain as a decentralised lending platform, issuing the stablecoin USDS when users take out cryptocurrency-backed loans. Users can also deposit USDS into savings vaults and receive yield-bearing sUSDS tokens in return. With a market cap of $7.7 billion, USDS is now the third-largest stablecoin, following Tether (USDT) and USD Coin (USDC).
According to S&P, the rating reflects both strengths and weaknesses in Sky’s operations. Key concerns include:
High depositor concentration
Centralised governance is still reliant on founder Rune Christensen
Weak risk-adjusted capitalisation (just 0.4%)
Exposure to regulatory uncertainty
Despite these, the rating is supported by Sky’s limited historical credit losses, adequate liquidity buffers, and secure smart contract architecture, including audits and bug bounty programs. S&P also acknowledged Sky’s robust liquidation mechanisms, which have performed well in past crypto downturns.
The report also highlighted Sky’s exposure to tokenised assets, including $985 million in tokenised money market funds from BlackRock and Janus Henderson, as well as its investment in USDe, a synthetic dollar issued by Ethena.
Sky is currently undergoing a major governance shift through its “Endgame” project, which aims to decentralise control through a dual DAO model. The protocol is also one of the earliest adopters of tokenised financial instruments, including Janus Henderson’s tokenised CLO fund.
Jonathan Manley, Global Head of Market Outreach at S&P, commented: “The issuance of a first-ever credit rating on a DeFi protocol represents a significant milestone in the evolution of decentralised finance. It underscores our commitment to enhancing transparency in the DeFi ecosystem.”
S&P has also rated the USDS stablecoin as “constrained” (4 out of 5) in terms of its ability to maintain its dollar peg, citing potential depegging risks under stress.
This rating is part of S&P’s broader initiative to assess financial instruments at the intersection of traditional and decentralised finance, including tokenised funds and blockchain-based securitisations.
