Standard Chartered has initiated research coverage of Sky, the DeFi protocol formerly known as MakerDAO, describing it as the closest thing decentralised finance has to a central bank.
The bank’s global head of digital assets research, Geoffrey Kendrick, set a target of $0.325 for the SKY token by the end of 2028, roughly five times its current level of around $0.065. That figure rests on a chain of conditions, each of which has to hold for the next to matter.
Why a Central Bank
The analogy is the useful part of the note, and it is not a stretch.
Sky issues two stablecoins, USDS and DAI. It sets the governance rules under which its ecosystem operates. And it lends at a wholesale interest rate to a small number of intermediaries.
‘In the off-chain world, Sky would be akin to a central bank, issuing currency (USDS and DAI), setting governance rules for the agents, and lending money at wholesale interest rates,’ Kendrick wrote. ‘The agents are akin to commercial banks that borrow at the wholesale rate and decide where to allocate the borrowed funds to earn an interest spread.’
Where the Money Comes From
Three agents do the lending. Spark handles crypto lending, including through Aave and Morpho. Grove allocates to real-world assets, including products from BlackRock, Janus Henderson and Apollo. Obex brings in specialist capital allocators.
Between them they have borrowed $5.9 billion in USDS and pay Sky a base rate of 3.8% on it. Sky earns additional income from USDC held through Coinbase in its peg stability module, the mechanism that allows swaps between USDS and USDC, and from older DAI lending vaults.
That income is what eventually reaches SKY holders, through staking rewards and buybacks. Kendrick describes SKY as primarily a staking yield token, with buybacks a smaller component. The current staking yield is 4.2%.
How the Forecast Is Built
Kendrick sets out two stages.
The first is the reserve. Sky holds about $90 million in what it calls aggregate backstop capital, retaining part of its income to build it. At the current pace Kendrick estimates it could reach $150 million in around eight months. If it also reaches 1.5% of outstanding USDS supply, he expects the amount available for staking rewards and buybacks to double.
The second is lending volume. The three agents have combined borrowing limits of $17.5 billion, almost three times what they currently draw. Borrowing up to those limits could produce a further two to threefold increase in income, assuming interest spreads hold.
‘We estimate that the value Sky passes on to SKY token holders will increase 5x by end-2028 from today’s level, driven by growth in both the Sky ecosystem and USDS outstanding,’ Kendrick wrote. ‘All other things being equal, this should drive a 5x rise in the SKY price.’
What Has to Go Right
That last sentence is where a reader should slow down. Counting the conditions in the note, the forecast requires all of the following to hold together over more than two years.
The reserve buffer reaches $150 million on schedule. It also reaches 1.5% of outstanding USDS supply. Sky’s agents borrow up to their $17.5 billion limits, nearly tripling current volumes. Interest spreads stay constant while they do. The staking yield stays around 4.2%. The overall stablecoin market reaches the $2 trillion Kendrick forecasts by end-2028. Enough of that demand goes to yield-bearing stablecoins specifically. And the value accruing to holders translates into price on close to a one-for-one basis.
That is eight assumptions, and the count is CNR’s own reading of the note rather than a figure Standard Chartered presents. Each is defensible on its own. Stacked, they describe a fairly narrow path.
The Bank’s Own Caveat
Kendrick names one of those conditions as the weak link himself. He continues to forecast a $2 trillion stablecoin market by the end of 2028, but says he is less certain how much of that demand will go to yield-bearing stablecoins of the kind Sky and Ethena issue.
‘The main risk to this view would be if yield-bearing stablecoin growth is slower than expected,’ he wrote.
His projections imply SKY would broadly match ether’s gains and outperform bitcoin through the end of 2028.
