Sky, a decentralized finance (DeFi) savings protocol, has reported a substantial loss of $5 million for the first quarter of 2025. This marks a significant downturn from the $31 million profit it achieved in the previous quarter. The startling shift is attributed to a 102% increase in interest payments to savers prompted by the introduction of its new stablecoin, USDS, which was meant to encourage its use over the existing DAI currency.
Key Details:
- Sky Face Major Loss: The protocol’s recent results highlight a tough financial change, raising questions about its future strategy.
- Interest Payment Surge: The sharp rise in payouts is an effort to incentivize users to deposit USDS, though it remains uncertain if new users have joined as a result.
- Yield Disparity: Whereas USDS offers a yield of 4.5%, DAI offers a much lower rate of 2.75%, posing challenges for the protocol’s balance sheet.
“The Sky Savings Rate was kept very high at 12.5% relative to the rest of the market, driving massive inflows,” said Rune Christensen, co-founder of Sky, via Telegram.
Translation: Rune Christensen states that by maintaining a higher savings rate, they attracted significant deposits.
The protocol, rebranded from MakerDAO, operates similarly to a traditional bank, needing to lend at a higher rate than what it offers savers. PaperImperium, a governance liaison at GFX Labs, has indicated that while increasing USDS yields, the protocol has seen no substantial rise in new demand, impacting profitability.
