S&P Global Ratings assigned the credit rating of the B-imitenta issuer to Sky Protocol, previously known as Maker’s protocol, which means that the first credit rating agency issued a rating for a decentralized finance (DEFI) platform.
The assessment is part of the ongoing assessment of S&P of Stablecoin issuers, which began in 2023 in order to assess their ability to maintain a stable value in relation to Fiat currencies. The review includes the credibility of Sky, USDS (USDS) and Dai (Dai) Stablecouins and Susds and SDAI savings tokens.
The Sky protocol, assessed for the first time, received “4” – marked as “limited” – for the ability of USDS to keep the dollar to maintain a dollar. The scale runs from “1” for very forceful to “5” for the faint.
Sky Protocol is a decentralized loan platform that allows users to borrow loans supported by cryptocurrency. His USDS Stablecoin, used to facilitate loan and borrowing transactions, is the fourth largest market capitalization, with about $ 5.36 billion at the time of writing, According to to Coinmarketcap.
S&P defines the default obligations of the protocol as “a hairstyle imposed on token owners”. It emphasizes the key risk that could cause such default, including depositor payments exceeding the liquidity available in the PEG stability module and credit losses exceeding the available capital.
The government, capitalization and regulatory risk are the main fears
Related: Sky doubles the renovation of the token: it makes MKR useless, starting Subdoos
The S&P assessment indicated the weaknesses of the protocol, including the high concentration of the depositor, centralized management, dependence on the founder, regulatory uncertainty and needy capitalization. These risk are partly compensated by minimal losses and earnings of the protocol from 2020.
Andrew O’Neil, S&P Global’s Digital Assets Antital Lead, said Cointelegraph: “A” B- “means that we think that the protocol can now fulfill its financial obligations, but would be sensitive in adverse business, financial and economic conditions.”
The Sky Ecosystem Advertary Committee said that this process gave the chance to examine both the conventional risk of the contractor and threats specific to DEFs, such as the risk of an clever contract, oracle, bridge and management.
“As part of the interviews and documentation that we made available with S&P, we had the opportunity to visit and question some analytical assumptions regarding the risk of the contractor, which are typical of Tradfi, but do not necessarily apply to the market, and we also studied innovative, default, risk – intelligent risk.
Rune Christensen, a co -founder of Sky, has almost 9% of management tokens. The S&P assessment stated that “the protocol management process remains highly centralized due to low election attendance during key decisions.”
Sky capitalization is another main problem. According to the evaluation, with a capital rate corrected with 0.4% as at July 27, the protocol has a limited reserve buffer of the surplus to cover potential credit losses.
The S&P assessment also lowered the anchor assessment of the “BB” protocol, four feet below the bank’s Kotwica in the USA “BBB+”, citing regulatory uncertainty in the DEFI sector.
Stablecoin issues under increased analysis
Since the cryptocurrency still deepens its involvement in traditional financial markets, more institutions are introduced into the formal credit assessment system in the cryptocurrency space.
S&P Global began assessing Stablecoin stability in December 2023. According to the Circle USDC (USDC) report, he received 2 (strong) rating, while Tether (USDT) and USDS in the 4 (limited) ranking.
“Tether weaknesses are more around transparency, while USDS has a more intricate asset base compared to USDC. And indeed a relatively needy capital position is also something that drives this relative ranking,” said O’Neil.
The first mortgage securitization based on blockchain, which received a rating from S&P Global, was Figure Technology Solutions, a technology platform that powers the market of financial products based on blockchain. In June, the latest securitization of mortgage assets, with a total value of $ 355 million, received the “AAA” assessment by S&P Global.
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