MakerDAO received a B- credit rating after its transformation, on the same level as Congo's government bonds.

Author: DLNews

Translation: Deep Tide TechFlow

Deep Tide Guide: S&P last August rated Sky’s USDS and DAI at B-, on par with the Democratic Republic of Congo government bonds, falling into the junk bond category. To attract institutional investors, Sky and its subDAO Spark are repackaging debt, isolating high-risk yield sources, and launching junior capital pools. Credit ratings are becoming a key threshold for DeFi protocols to attract traditional financial capital.

Sky aims to improve its credit rating.

This DeFi lending platform received a B- rating from S&P Global Ratings in August.

Credit ratings are becoming increasingly important for DeFi protocols.

Sky and its subDAO Spark will repackage their products, minimize exposure to risk-yield sources, and launch new capital pools to enhance Sky’s credit rating for potential institutional investors.

In August, S&P Global Ratings assigned this decentralized finance lending platform a B- credit rating, placing the protocol’s USDS and DAI stablecoins on the same level as the government bonds of the Democratic Republic of Congo.

As the protocol seeks to attract more institutions, their goal is to improve this rating.

“We have already achieved dominance in the current market. We need to grow into TradFi,” said Sam MacPherson, CEO of Phoenix Labs, the core development team behind Spark and a key contributor to Sky, in an interview at EthCC Cannes.

“We are very focused on improving the weak points that traditional institutional participants care about,” he said.

As blockchain technology becomes more accepted and adopted by the world’s largest financial institutions, capital from the traditional financial world is flowing into DeFi.

DeFi protocols hope to attract these new investors, and one effective way to do so is to obtain strong scores from reputable rating agencies.

Credit ratings indicate the likelihood of debt issuers defaulting on loans or other debt instruments due to bankruptcy. They are crucial for traditional financial companies because they help manage risks in financial markets.

High-yield bonds, commonly called junk bonds, refer to any debt securities rated below BBB- by S&P Global Ratings or Fitch.

Senior and Subordinated

The first thing Sky and Spark plan to do is repackage debt supporting USDS stablecoins.

Sky users can mint USDS by depositing cryptocurrencies like Ethereum and stablecoins into Sky Vaults, which earn yields on these deposits. Users can then exchange USDS for sUSDS via Spark, which is an interest-bearing version of the token. Users cannot mint more USDS than their collateral value, meaning the loans are over-collateralized.

“There will be USDS, possibly with some exposure to high-yield products, but it will be packaged in a way that rating agencies find acceptable,” MacPherson said.

Meanwhile, Spark plans to isolate higher-risk, higher-yield assets into junior risk capital pools in Q2.

“This will be a first-loss type pool. Higher risk, but also higher returns,” MacPherson said.

Such structured financial products are common in traditional financial markets.

When borrowers repay debt, lenders holding so-called senior products are paid first, but typically with lower returns. This makes the products less risky and popular among conservative investors.

On the other hand, subordinated products carry higher risk because they are paid last, but they offer higher yields to compensate for potential losses.

Additionally, MacPherson said Sky and Spark have minimized exposure to USDe, a synthetic dollar issued by Ethena, another DeFi protocol.

S&P Global Ratings previously assigned a 1250% risk weight to USDe in Sky’s assessment, due to its complex mechanisms used to maintain its value.

Rating Race

Sky is not the only crypto project paying for credit ratings.

In 2022, DeFi lending platform Compound Finance’s institutional division, Compound Prime, also received a B- rating for its senior unsecured debt from S&P Global Ratings.

Besides traditional rating agencies like S&P Global Ratings, Moody’s Ratings, and Fitch Ratings, several crypto-native rating agencies are emerging.

Platforms like Credora provide credit analysis and risk assessment for DeFi lending, although their ratings have not yet gained the same weight among investors as traditional institutions.

By March 2026, Spark’s stUSDS Vault has received a B+ rating, equivalent to a BB- from traditional rating agencies.

For DeFi protocols, obtaining these ratings is “very important,” MacPherson said.

“There’s a lot of questionable underwriting going on right now, and there’s a real need to scrutinize the main vault lending markets,” he said.

Update, April 9: This article has been updated to distinguish references to Sky and Sky subDAO Spark.