S&P International Scores has issued its first credit standing for a decentralized finance protocol, assigning Sky Protocol a B-minus with a steady outlook.
The ranking, printed August 8, applies to the protocol’s stablecoin liabilities, together with USDS and DAI, in addition to their interest-bearing variations, however doesn’t prolong to governance tokens. The transfer establishes a precedent for making use of conventional credit score analysis frameworks to on-chain entities.
S&P cited a number of constraints behind the speculative-grade ranking. Depositor focus was a central issue, with a small variety of individuals controlling a big share of property.
Governance centralization was additionally flagged, with founder Rune Christensen holding roughly 9% of governance tokens amid low voter participation. The protocol’s risk-adjusted capital ratio of slightly below 0.5% was famous as low relative to conventional credit score requirements, alongside issues over regulatory and cyber dangers.
Per Ainvest, S&P equated Sky Protocol’s credit score profile to that of the Republic of Congo’s sovereign debt, putting it firmly in speculative territory. The company’s steady outlook displays an expectation that present threat elements will persist over the subsequent 12 months, with upgrades contingent on enhancements in governance decentralization, capital adequacy, and depositor range.
The evaluation additionally acknowledged operational strengths. Sky has operated with minimal credit score losses since 2020, maintains diversified liquidity reserves that embrace fiat-backed stablecoins and tokenized funds, and has undergone exterior good contract audits. These mitigants, whereas supporting the ranking, had been outweighed by focus and structural dangers.
S&P’s entry into protocol-level scores follows its prior evaluations of stablecoins, the place it assigned “robust” to USDC and “constrained” to USDT in earlier assessments.
The transfer extends that framework to the broader liabilities of a DeFi protocol, enabling sure institutional counterparties similar to prime brokers, insurers, and structured product arrangers to reference a standardized measure of credit score threat.
Such scores may now affect how DeFi yields are priced. An outlined credit score threat profile permits the repricing of lending and liquidity provisions in keeping with conventional credit score markets, slightly than solely on supply-demand dynamics inside protocols.
The introduction of acknowledged credit score benchmarks additionally creates a pathway for DeFi publicity to satisfy mandates from regulated entities that require minimal ranking thresholds.
Sky Protocol’s ranking is unlikely to vary within the close to time period, in accordance with S&P’s printed methodology, although future governance and capital reforms may alter that trajectory.
The company’s evaluation provides a formalized threat lens to DeFi operations, offering a typical reference level for each on-chain individuals and conventional monetary establishments searching for to interact with the sector.
