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Moody's assigns Sky Protocol first stablecoin credit rating
Moody's has rated Sky Protocol B3 with a stable outlook, the first credit rating for a stablecoin protocol, flagging thin capital as a material weakness.
Why it matters: Moody's has applied traditional credit analysis to a DeFi protocol for the first time, giving markets a benchmark for the risks in stablecoin issuers.
Key points
- Sky held about $90m in tangible common equity against roughly $10bn in tangible managed assets as of September.
- An upgrade could follow if the capital ratio stays above 2.5%; a fall below 0.5% could trigger a downgrade.
Sky, formerly MakerDAO, oversees the dollar-pegged USDS and DAI tokens.
The rating came with a warning on capital. The agency also cited confidence-sensitive stablecoin liabilities and the risks of the protocol's DAO structure, smart contracts and permissionless model, and noted Sky has no audited financial statements, formal incorporation, employees, officers or directors.
On the positive side, Moody's credited Sky with a solid though limited operating history, liquid assets and low historical credit losses of about $15m since 2020. Between 45% and 50% of its assets are stablecoins and tokenised money market funds, with another roughly 25% in cryptocurrency-backed loans.
Sky's governance targets tangible common equity of $150m over the medium term.
Live updates on NewsFeeds:StablecoinsDesk editor: Keshav Aggarwal (accountable for this page; this summary was not edited by hand)
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Not investment advice. Read the risk disclaimer.