Moody's assigns B3 rating to Sky Protocol

Moody's has issued a B3 long-term counterparty risk rating to Sky Protocol, marking the agency's first credit rating for a stablecoin protocol. Sky, which rebranded from MakerDAO, oversees the USDS and DAI stablecoins.

While the rating includes a stable outlook and acknowledges Sky's solid operating history and liquidity, Moody's identified a “material credit weakness” regarding the protocol's capitalization. As of September, Sky held approximately $90 million in tangible common equity against roughly $10 billion in tangible managed assets.

The agency noted that Sky's credit profile is impacted by its thin capitalization, the decentralized autonomous organization (DAO) structure, and the lack of audited financial statements, formal incorporation, or traditional corporate officers. Moody's suggested an upgrade could be possible if the protocol's capital ratio exceeds 2.5%.