S&P Global Ratings has officially assigned a ‘B-‘ stablecoin credit rating to Sky Protocol, the issuer of USDS stablecoin.
This marks the first time a credit rating has been assigned to a DeFi stablecoin, reflecting S&P’s recognition of the growing relevance of decentralized finance within the global financial system.
The ‘B-‘ rating underscores significant concerns regarding Sky Protocol’s centralized governance structure, where co-founder Rune Christensen holds 9% of governance tokens.
This concentration of control, coupled with low voter turnout among token holders, raises questions about the protocol’s true level of decentralization.
S&P identified liquidity risks stemming from a concentration of large depositors, which could destabilize the system if significant withdrawals occur.
The agency noted that the protocol’s risk-adjusted capital ratio of 0.4% and its underdeveloped static surplus reserve mechanism further contribute to its credit risk profile.
S&P also warned of potential downgrades within the next 12 months due to potential smart contract vulnerabilities, regulatory shifts, or market shocks such as liquidity crunches.
However, the agency did express a cautious optimism about Sky Protocol’s long-term prospects, citing its operational resilience since 2020.
Improvements in governance decentralization, capital adequacy, and deposit diversification could lead to a stronger credit rating in the future.
