S&P Assigns First DeFi Protocol Rating to Sky Protocol With B-Minus and Stable Outlook

S&P Global Ratings has marked a pivotal moment in the evolution of decentralized finance by assigning its first-ever credit rating to a DeFi protocol. Sky Protocol was awarded a B-minus with a stable outlook, as reported on August 8. This rating specifically applies to the protocol’s stablecoin liabilities, including USDS and DAI, and their interest-bearing forms, excluding governance tokens [1].

The B-minus rating is classified as speculative-grade, with S&P citing several key factors behind the assessment. A central concern was depositor concentration, where a small number of participants hold a large portion of the protocol’s assets. Governance centralization was also highlighted, with Rune Christensen, the founder of Sky Protocol, owning roughly 9% of the governance tokens amidst low voter participation [1].

According to Ainvest, S&P compared the credit profile of Sky Protocol to the sovereign debt of the Republic of Congo, reinforcing the speculative nature of the rating [1]. The agency's stable outlook suggests that current risk factors are expected to remain for the next 12 months, with potential upgrades hinging on improvements in governance decentralization, capital adequacy, and depositor diversity [1].

Despite these concerns, S&P acknowledged several operational strengths of Sky Protocol. Since 2020, the protocol has operated with minimal credit losses and maintains a diversified set of liquidity reserves, including fiat-backed stablecoins and tokenized funds. External smart contract audits further bolster the protocol’s credibility [1].

This development expands S&P’s existing credit evaluation framework, which was previously applied to stablecoins such as USDC (rated “strong”) and USDT (rated “constrained”) [1]. By extending the framework to DeFi protocols, S&P has created a standardized measure of credit risk that could be used by institutional counterparties, including prime brokers, insurers, and structured product arrangers [1].

The rating also has the potential to influence how DeFi yields are priced. With a defined credit risk profile, lending and liquidity provisions can now be priced in alignment with traditional credit markets, moving beyond the current reliance on supply-demand dynamics within protocols [1]. Furthermore, the introduction of recognized credit benchmarks allows DeFi exposure to meet regulatory requirements that mandate minimum rating thresholds [1].

According to S&P’s published methodology, the rating for Sky Protocol is unlikely to change in the near term. However, future governance and capital reforms could alter the trajectory [1]. The agency’s analysis provides a formalized risk assessment for DeFi operations, offering a common reference point for both on-chain participants and traditional financial institutions [1].

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[1] What S&P’s first DeFi protocol rating unlocks for on-chain credit in 2026. (https://cryptoslate.com/what-sps-first-protocol-rating-unlocks-for-on-chain-credit-in-2026/)