DeFi Protocol Sky Reports $5 Million Loss Due to Rising USDS Interest Payments
Sky, formerly known as MakerDAO, reported a first-quarter loss of $5 million due to interest payments to token holders more than doubling. This follows a $31 million profit in the previous quarter.
- Interest payments surged 102% as Sky incentivized use of its newer stablecoin, USDS, over DAI.
- Sky Savings Rate was maintained at 12.5%, attracting inflows, but reduced to 4.5% in February.
- Higher rates on USDS without increased demand are impacting profitability, according to GFX Labs.
- USDS is less profitable compared to DAI, which generates revenue for the protocol.
- USDS aimed to attract sophisticated investors but unclear if it gained significant new users.
- USDS offers 4.5% returns versus DAI's 2.75%, leading some investors to switch stablecoins.
- Combined supply of USDS and DAI increased by 57% since the start of the quarter, partly due to Ethena's contributions.
- Recent shifts from USDS to USDtb by Ethena may reduce interest payouts for Sky.