S&P Global Assigns First Credit Rating to DeFi Protocol

S&P Global has assigned a ‘B-‘ credit rating to Sky Protocol, marking the first such rating for a decentralized finance protocol, focusing on its stablecoins USDS and DAI.

This rating underscores the growing legitimacy of DeFi in traditional finance, prompting potential market shifts as investors reevaluate the broader implications for crypto investments.

S&P Rates Sky Protocol B- in Historic Move

S&P Global Ratings assigned a B- credit rating to Sky Protocol, formerly known as Maker Protocol. This historic move is the first of its kind for a decentralized finance protocol. The score assesses the creditworthiness of Sky Protocol’s stablecoins including USDS and DAI. Rune Christensen continues to lead the organization, supporting an agenda focused on governance centralization.

“The issuance of a first ever credit rating on a DeFi protocol represents a significant milestone in the evolution of decentralized finance,” said Jonathan Manley, Global Head of Market Outreach at S&P Global Ratings. “It underscores our commitment to enhancing transparency in the DeFi ecosystem, providing investors with high quality insights to make informed decisions in this rapidly evolving market.” S&P Global

DeFi Nears Traditional Finance S&P Standards

The rating positions DeFi closer to traditional financial systems by meeting major ratings agency standards. However, it highlights potential liquidity and capital risks for Sky Protocol’s assets. Industry figures like S&P’s Jonathan Manley laud the move’s transparency, while others note it may provoke further examination of DeFi’s integration into traditional finance systems.

Sky Protocol Rating Sets New Industry Standard

Previous ratings by S&P primarily focused on centralized entities. Sky Protocol’s rating sets a new precedent for decentralized finance, changing the landscape of financial assessments in the crypto world. Future outcomes may involve increased investor confidence and capital influx into DeFi, contingent on reducing highlighted risks such as governance centralization and liquidity challenges.

“The rating was ‘very fair’ and warned of people ‘getting hung up on the B- because it’s not investment-grade,'” said Hasu, Analyst at Steakhouse Financial PANewsLab