Assessment of a Credit Rating Granted to a Decentralized Finance Protocol by S&P
In a groundbreaking move, S&P Global Ratings has assigned ratings to the FIGRE Trust 2025 mortgage-backed notes, a Home Equity Line of Credit ("HELOC") transaction, marking the first blockchain-based mortgage securitization to receive ratings from the renowned credit agency.
Meanwhile, in the realm of decentralized finance (DeFi), S&P Global Ratings has issued a B- (Stable Outlook) credit rating for Sky Protocol, a decentralized lending protocol on the Ethereum blockchain. This rating is significant as it is an early formal recognition by a major global credit rating agency of a DeFi protocol’s credit risk profile.
Sky Protocol, previously known as Maker Protocol, creates a stablecoin, USDS, when a borrower takes out a loan against a formally accepted collateral type. The stable outlook suggests confidence in Sky Protocol’s financial resilience and governance within the volatile DeFi ecosystem, which helps reduce perceived risks for institutional and retail investors.
This rating is a step towards bridging traditional finance (TradFi) and DeFi, as it provides a standardized, independent measure of credit risk that can aid investors, regulators, and financial institutions in evaluating DeFi products with greater confidence.
Such rating decisions can foster wider institutional participation in decentralized lending, helping DeFi protocols secure more capital and scale securely. By endorsing a decentralized lending protocol with a recognized rating, S&P Global is implicitly acknowledging the growing maturity and integration potential of DeFi within the mainstream financial landscape.
This may accelerate adoption by reducing barriers related to perceived risk and regulatory uncertainty, contributing to DeFi’s legitimacy as a complementary or alternative financial ecosystem.
S&P Global Ratings has also recognized the increasing transformation of the capital markets by decentralized finance, including an expansion in the spectrum of market participants, the creation of new asset classes, and the development of new capabilities in the execution of financial transactions.
The credit rating provides investors with high quality insights to make informed decisions in the rapidly evolving DeFi market. S&P Global Ratings has issued a B- (Stable Outlook) credit rating for Sky Protocol, signaling a milestone for DeFi by providing a trusted credit assessment that can boost investor confidence and support broader integration of decentralized lending within global finance.
In addition, S&P Global Ratings has assessed USDS's ability to maintain its peg to the U.S. dollar at 4 (constrained), indicating a strong ability to maintain its stability. The rating agency has also issued ratings to two tokenized funds: Janus Henderson's Anemoy Tokenized Treasury Fund and the Delta Wellington Ultra Short Treasury On-Chain Fund.
Jonathan Manley, Global Head of Market Outreach at S&P Global Ratings, commented that the rating underscores their commitment to enhancing transparency in the DeFi ecosystem. The launch of S&P Global Ratings' Stablecoin Stability Assessments (SSAs) in December 2023 further underscores this commitment.
Initial investors in such funds are typically the treasuries of decentralized autonomous organizations, with Sky being the main initial investor in the Janus Henderson fund. Sky has recently announced further investment in a different Janus Henderson tokenized CLO ETF.
Figure's origination process is fully automated and uses blockchain technology for origination as well as servicing. This automation and integration of blockchain technology in financial transactions is a testament to the transformative potential of decentralized finance in the global financial landscape.
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