Moody’s Ratings listed a B3 counterparty risk rating for Sky Protocol on October 6, 2026. It is a credit-risk assessment—not a guarantee that USDS can always be redeemed for one dollar or that holders cannot lose money. The publicly accessible listing confirms the rating type, subject and date, but does not provide the full rationale, outlook or liabilities covered. That distinction matters: a separate S&P rating published in 2025 offers context about Sky’s risks, but it is not Moody’s explanation for B3.
What does Moody’s B3 rating mean for Sky Protocol and USDS holders?
The confirmed Moody’s action is a B3 counterparty risk rating for Sky Protocol, dated October 6, 2026. A counterparty risk rating concerns the risk associated with an entity meeting its financial obligations to counterparties; it should not be relabeled as an issuer credit rating or treated as a direct rating of every token or holder outcome. The accessible Moody’s listing does not show the full rating analysis, outlook, precise scope or definition applied in this action. Moody’s ratings-news listing
For USDS holders, the practical takeaway is limited but important: the rating signals that Moody’s has assessed a credit-related risk associated with Sky Protocol, but the listing alone does not establish a specific probability of loss, a redemption guarantee, or what would happen to an individual holder in a stress event. A credit rating is an agency assessment, not insurance or a promise against loss.
Is Moody’s B3 the same as S&P’s B- rating?
No. They are separate assessments by different agencies, issued on different dates and using different rating categories. S&P Global Ratings assigned Sky Protocol a B- issuer credit rating with a stable outlook on August 7, 2025. Moody’s later listing identifies a B3 counterparty risk rating on October 6, 2026. The available Moody’s listing does not confirm an outlook. The symbols may look comparable, but the labels and underlying agency analyses are not interchangeable.
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| Agency and date | Rated subject and type | Outlook | What the cited publication establishes |
|---|---|---|---|
| Moody’s Ratings, October 6, 2026 | Sky Protocol; B3 counterparty risk rating | Not stated in the accessible listing (Moody’s Ratings) | Rating symbol, subject, category and action date; detailed rationale and scope are not shown. |
| S&P Global Ratings, August 7, 2025 | Sky Protocol; B- issuer credit rating | Stable | Rating, outlook and S&P’s own analysis as of its 2025 publication. |
Read S&P’s findings as historical context rather than as Moody’s rationale or a statement of current conditions. S&P’s publication is titled “Sky Protocol Assigned ‘B-‘ Rating; Outlook Stable”.
What risks did S&P identify in its 2025 assessment?
S&P’s 2025 analysis described a risk picture for Sky that included several distinct channels. These are S&P’s observations from that assessment; the accessible Moody’s listing does not confirm that Moody’s relied on the same factors.
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- Liquidity and withdrawals: S&P discussed a scenario in which user withdrawals could exceed liquidity available in the peg stability module.
- Loss absorption and capitalization: S&P said credit losses could exceed available capital and described risk-adjusted capitalization and earnings capacity as weak. It reported a 0.4% risk-adjusted capital ratio as of July 27, 2025 (S&P Global Ratings, 2025); this is a dated historical measure, not a current ratio.
- Concentration and governance: S&P flagged depositor concentration, governance centralization and transition, and reliance on the founder as a key person.
- Regulation: S&P cited regulatory uncertainty.
- Smart-contract and cyber risk: S&P characterized this as low-probability but high-severity and cited audits, bug bounties and a history without security breaches as mitigants at the time of its assessment. Those cited mitigants do not mean future vulnerabilities are impossible.
- Asset composition: S&P reported that 35% of Sky’s assets as of July 27, 2025 were in real-world assets, including U.S. Treasury bill exposures and USDC (S&P Global Ratings, 2025). That percentage describes the portfolio on that date, not today’s composition.
S&P said its analysis covered liabilities including USDS and DAI stablecoins, as well as sUSDS and sDAI savings tokens. It described potential stress involving withdrawals outpacing available liquidity and credit losses exceeding available capital. S&P also defined default for its own analysis as a haircut to holders. That is S&P’s analytical definition and should not be attributed to Moody’s without Moody’s own published terms. Further detail appears in S&P’s rating publication.
How do USDS and Sky Protocol work?
A 2026 issuer disclosure filed with the U.S. SEC describes Sky Protocol as the former MakerDAO protocol and USDS as its native stablecoin. In the described mechanism, users deposit approved collateral into vaults and borrow USDS against it. If collateral falls below a specified threshold, liquidation is intended to sell collateral to repay USDS. This explains the protocol’s design; it is not proof that liquidations prevent every loss or that every holder has a guaranteed dollar redemption. SEC-filed issuer disclosure
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USDS is therefore not the same thing as a conventional bank deposit. A dollar reference for a stablecoin does not by itself make the token insured cash, establish an unconditional right to redeem one-for-one, or eliminate smart-contract, liquidity, collateral or governance risks.
Independent reader supportYour contribution helps us test, update, and keep practical guides available for everyone.What do the reported incidents establish—and what do they not?
A separate issuer exhibit filed with the SEC in 2026 describes technical, market, governance, regulatory and operational risks. It reports a May 2025 exploit involving a third-party vault product integrated with sUSDS, with an approximately $43,000 loss at the vault level before safeguards paused it. The filing says the incident did not affect Sky’s core smart contracts or the USDS peg. It also says Sky precautionarily paused a cross-chain bridging integration in April 2026 after an exploit at an unaffiliated protocol, without impact to Sky contracts or USDS collateralization. These are the filing’s descriptions of particular events; they do not establish that all third-party integrations or future incidents are risk-free. SEC-filed risk disclosure
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What should a holder check before relying on the rating?
- Confirm the rating’s agency, category, subject and date rather than comparing symbols alone.
- Look for the full Moody’s action before drawing conclusions about its rationale, outlook, covered liabilities or meaning for particular tokens.
- Separate an agency’s credit assessment from the protocol’s mechanics and from any assumptions about dollar redemption or deposit insurance.
- When using S&P’s 2025 analysis, keep its figures and risk observations attached to that date and that agency.
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