S&P Global assigns ‘B-’ credit rating to Sky Protocol, first for DeFi protocol

Key Points

1. S&P Global assigned a 'B-' issuer credit rating to Sky Protocol, a decentralized finance (DeFi) platform, marking its first evaluation.

2. Sky Protocol's USDS stablecoin received a '4' (constrained) rating for its ability to maintain its peg to the US dollar, with concerns over its stability module and credit losses.

3. Primary concerns include governance uncertainty, weak capitalization (risk-adjusted capital ratio of 0.4%), and regulatory risks, partially offset by minimal credit losses since 2020.

4. S&P's assessment lowered Sky Protocol's anchor rating to 'bb', four notches below the US bank anchor, reflecting its higher risk profile.

5. Comparatively, Circle's USDC received a '2' (strong) rating, while Tether and USDS ranked '4' (constrained), with USDS noted for its complex asset base.