#DeFiGetsGraded Are DeFi Ratings Really Reliable? 🚀" Will They Improve the Future of DeFi?

On August 8, 2025, S&P Global Ratings issued its first credit rating for a DeFi protocol, assigning Sky Protocol (formerly MakerDAO) a rating of B- with a stable outlook. The rating covers the protocol's stablecoin obligations—USDS and DAI, including interest-generating versions—but excludes governance tokens.

Advantages:

📜 Transparency and Legitimacy: Aligns DeFi with traditional credit assessment frameworks.

🏦 Institutional Access: Allows regulated entities like banks and insurers to participate in DeFi under familiar rules.

📊 Risk Comparison: Helps price returns based on standardized credit risks rather than just specific protocol factors.

Disadvantages (Rating Limitations):

🔍 Narrow Coverage: Focuses only on specific obligations, not the full scope of the protocol.

⏳ Static Snapshot: May not keep pace with rapidly changing on-chain risks.

🛠️ Traditional Bias: Legacy financial models may overlook native blockchain threats.

🌀 False Sense of Security: Could mislead less experienced investors into overestimating security.

Key Risk Factors Identified by S&P:

👥 Depositor Concentration: Few participants control a large portion of the assets.

🏛️ Governance Centralization: Founder Rune Christensen owns ~9% of governance tokens; voter participation is low.

💰 Weak Capital Buffer: Risk-adjusted capital ratio below 0.5%.

⚖️ Regulatory and Cyber Threats: Persistent compliance and security risks.

Currently Rated:

🌐 Sky Protocol – B- (Stable) – USDS and DAI Obligations.