Moody's Ratings has assigned a B3 issuer rating with a stable outlook to Sky Protocol, marking the first time the agency has rated a stablecoin protocol. The announcement from the Sky Frontier Foundation on October 7, 2026, follows a corroborated B- rating from S&P Global Ratings in recent weeks. Sky Protocol is now the only stablecoin protocol formally rated by both major credit rating agencies.
Rating Details and Rationale
The B3 rating sits five notches below investment grade and is classified as high risk. Moody's said the rating reflects a solid but limited operating history, relatively liquid assets, low credit losses, and profitability. These strengths are offset by low capitalization, confidence-sensitive stablecoin liabilities, and operational, governance, legal, and regulatory risks tied to the decentralized autonomous organization structure.
Capital and Loss Absorption Concerns
Moody's identified the protocol's capital position as a relevant credit weakness despite its modest loss history and multi-layer loss absorption structure. If losses exceed available capital, the protocol is required to issue and attempt to sell new governance tokens. Should those mechanisms prove insufficient, the value of the USDS and DAI stablecoins would be reduced, with broader implications for the protocol's credit profile.
Factors That Could Change the Rating
An upgrade could occur if capitalization grows while the protocol maintains current levels of profitability, liquidity, and asset risk. Moody's also cited substantial new mitigants for operational, governance, legal, and regulatory risks as a potential driver. A downgrade may follow two or more consecutive quarterly losses and liquidity deterioration, including if the USDC share relative to USDS and DAI falls below 20%.
Independent Ratings and Institutional Strategy
S&P Global Ratings assigned its own corroborated B- rating in recent weeks following a separate process with its own team and criteria. The two independent assessments allow institutional allocators to evaluate Sky Protocol using established credit-rating scales that are widely understood. According to the foundation, no other stablecoin protocol currently meets this standard of formal credit assessment.
How Sky Protocol Operates
Sky Protocol operates as a decentralized autonomous organization, or DAO, without the hierarchy of a traditional company. Token holders share control, and decision-making follows rules programmed on the blockchain. Its global capital allocation model supports the Sky Savings Rate and allows capital allocators to deploy USDS liquidity under governance-set risk parameters.
Building Sky Reserves and Governance Focus
Obtaining a formal credit rating is part of Sky Protocol's wider strategy to grow Sky Reserves. Sky Governance strengthened the protocol's Treasury Management Function and moved to a Stage 2 buyback and reserves framework that retains a portion of Net Protocol Revenue. Building these reserves takes time and remains a priority, with real-time metrics publicly available.
Leadership Comments and Long-Term Ambition
Greg Feibus, Global Head of Capital Markets at Sky Frontier Foundation, said the rigor Moody's brought to the review is appreciated. He noted that independent credit ratings let institutional investors assess Sky through frameworks already used across global markets. The foundation recognizes the considerations Moody's identified and remains focused on supporting efforts to raise the level of Sky Reserves.
Sky Protocol, formerly known as MakerDAO, powers a governance-set Sky Savings Rate and is backed by diversified collateral through the Sky Agent Network. Its sUSDS token is described as the world's largest stablecoin savings token. The dual ratings mark a significant milestone for institutional transparency, and Sky Governance and the foundation are reviewing the agencies' upgrade factors with a long-term ambition of reaching investment grade.