Moody’s Gives Sky Protocol B3 Stablecoin Rating

Moody’s assigned Sky Protocol a B3 credit rating with a stable outlook on October 7, making it the first stablecoin protocol rated by the agency. The assessment cited Sky’s low historical credit losses, liquid assets and profitability relative to risk, while identifying its limited capital cushion and governance-related risks as significant weaknesses. According to Moody’s, Sky had about $90 million in tangible common equity against roughly $10 billion in tangible managed assets as of September. One account of the rating put managed assets at $10 billion to $11 billion, depending on the measurement. The figures indicate a thin equity buffer relative to the assets overseen by the protocol, which was formerly known as MakerDAO. Moody’s described the B3 rating as reflecting Sky’s operating history in decentralized finance, the liquidity of a portion of its assets and its record of limited losses. It also cited stablecoin liabilities that may be sensitive to confidence, along with operational, governance, legal and regulatory risks tied to Sky’s decentralized autonomous organization structure, smart-contract infrastructure and permissionless stablecoin model.