Moody's Ratings assigned Sky Protocol a B3 issuer rating with a stable outlook, marking the first time the agency has rated a stablecoin protocol. S&P Global had previously assigned Sky a B- rating.
The announcement comes as institutional capital has deepened its exposure to stablecoin infrastructure. Galaxy Digital disclosed a $100 million treasury purchase of sUSDS, the tokenized version of Sky's dollar-backed USDS stablecoin, in early October. USDS supply stood at approximately $9.5 billion as of the rating date.
Sky Protocol, built on Ethereum and launched in 2024 as a successor to MakerDAO's governance structure, provides the underlying collateral and liquidation mechanisms for USDS. The stablecoin uses a multi-collateral vault system backed primarily by Ethereum and liquid staking tokens. Moody's stable outlook expects the protocol's credit profile to remain stable over the next 12 to 24 months.
The B3 rating places Sky in the non-investment-grade category, one notch above Moody's B- and two notches above its CCC+ threshold. S&P's B- assessment aligns with Moody's view of speculative-grade credit risk. Both ratings account for the operational and smart contract risks inherent in decentralized stablecoin protocols, even as institutional custodians and asset managers have begun treating USDS as a settlement asset.
Galaxy's sUSDS position deepens the overlap between traditional asset managers and on-chain dollar rails. Stablecoin protocols have historically lacked formal credit ratings, with most issuers relying on reserve attestations rather than third-party assessment. Moody's entry into stablecoin ratings follows years of institutional pressure for standardized credit frameworks that could inform custody and collateral policies.
The ratings agencies applied their standard corporate methodology to Sky, evaluating governance structure, financial resources, and protocol sustainability. USDS minting requires collateral deposits of more than 150 percent, a structure Moody's assessed as comparable to secured lending. The stable outlook assumes Sky maintains its current collateral ratio and governance participation rates hold without major exits.
If Sky's collateral ratio falls below 140 percent or total USDS supply declines more than 20 percent in a single quarter, Moody's stated it would review the rating for downgrade.
