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 score, revealed August 8, applies to the protocol’s stablecoin liabilities, together with USDS and DAI, in addition to their interest-bearing variations, however doesn’t lengthen 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 score. Depositor focus was a central issue, with a small variety of contributors controlling a big share of belongings.
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 just 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 danger 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 embody fiat-backed stablecoins and tokenized funds, and has undergone exterior good contract audits. These mitigants, whereas supporting the score, have 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 “sturdy” 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 danger.
Such scores might now affect how DeFi yields are priced. An outlined credit score danger profile allows the repricing of lending and liquidity provisions in step 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 score thresholds.
Sky Protocol’s score is unlikely to vary within the close to time period, in accordance with S&P’s revealed methodology, although future governance and capital reforms might alter that trajectory.
The company’s evaluation provides a formalized danger lens to DeFi operations, offering a standard reference level for each on-chain contributors and conventional monetary establishments searching for to have interaction with the sector.
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