S&P Global Ratings has issued its first creditworthiness for a decentralized financial protocol, which allows SKY protocol A B-Minus to a stable prospect.
The rating, published on 8 August, applies to the Stablecoin obligations of the protocol, including USDS and DAI, as well as their interest-bearing versions, but does not extend to administrative vessels. The movement to establish A precedent for applying traditional credit evaluation frameworks on entities on chains.
S&P mentioned various restrictions behind the speculative quality assessment. Custodian concentration was a central factor, in which a small number of participants checked a large part of the assets.
Governance Centralization was also marked, whereby founder Rune Christensen kept around 9% of the boardstokes in the midst of low voter participation. The risk-corrected capital ratio of the protocol of slightly less than 0.5% was noticed as a low compared to traditional credit standards, in addition to concern about regulatory and cyber risks.
Per At workS&P equaled the SKY Protocol’s credit profile to that of the sovereign debt of the Republic of Congo, so that it was firmly placed in a speculative area. The stable prospects of the Agency reflect an expectation that the current risk factors will continue to exist in the coming 12 months, with upgrades that depend on improvements in administrative decentralization, capital and diversity of depositors.
The assessment also recognized operational strengths. Sky has been working with minimal credit losses since 2020, maintains diversified liquidity reserves that include fiat-supported stablecoins and tokenized funds and undergo external smart contract audits. These mitigants, while supporting the rating, weighed against concentration and structural risks.
S&P’s access to protocol level reviews follows its earlier evaluations of Stablecoins, where it was assigned to USDT in previous reviews “Strong” to USDC and “Limited”.
The relocation extends that framework to the wider obligations of a Defi protocol, whereby certain institutional counterparties such as Prime Makelaars, insurers and structured product controllers can refer to a standardized degree of credit risk.
Such reviews can now influence how Defi revenues are priced. A defined credit risk profile makes the repetition of loans and liquidity provisions possible in accordance with traditional credit markets, rather than exclusively on the dynamics of the supply of supply within protocols.
The introduction of recognized credit benchmarks also creates a path for Defi -exposure to meet mandates of regulated entities that require minimal assessment thresholds.
It is unlikely that the rating of Sky Protocol will change in the short term, according to the published methodology of S&P, although future administration and capital reforms can change that process.
The analysis of the agency adds a formalized risk tens to defi-operations, and offers a common reference point for both participants in chains and traditional financial institutions that want to deal with the sector.
