S&P assigns a credit rating of "B-" to the issuance organization USDS Sky Protocol

Sky Protocol, the issuer of the stablecoin USDS, has just been rated "B-" by S&P Global, reflecting the risks associated with the concentration of depositors, a centralized governance model, and a weak risk-adjusted capital ratio.

This is the first time S&P has assigned a credit rating to a stablecoin system. However, S&P stated that the likelihood of upgrading Sky in the next 12 months is "very low."

According to the report, the risk-adjusted capital ratio is only at 0.4%, along with a lack of flexible reserves that poses a risk of a massive liquidity withdrawal. The high concentration of governance power — with founder Rune Christensen holding 9% of the tokens and a low voting participation rate — is also a cause for concern.

Some other risks include the possibility of smart contract attacks and an unclear DeFi legal environment. Nevertheless, Sky has been noted for having a stable operational history and modest income since 2020.

USDS is currently the 4th largest stablecoin in the world with a market capitalization of 7.9 billion USD.

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