Standard Chartered’s global head of digital asset research, Geoffrey Kendrick, initiated coverage on Sky, formerly MakerDAO, on Sept. 11 and set a $0.325 target price for the SKY token by the end of 2028. That compares with a current price of about $0.065, implying roughly 5x upside.
The core call in the report is that the value returned to SKY holders could increase fivefold by the end of 2028, driven by expansion across the Sky ecosystem and growth in USDS circulation.
Why the bank sees Sky as a DeFi central banking structure
Kendrick describes Sky as a “federal bank for DeFi.” The comparison is meant to explain how the protocol makes money.
In traditional finance, a central bank issues money, sets a policy rate and provides funding to commercial banks at wholesale cost. Those banks then allocate the capital and earn a spread. The report argues that Sky has built a similar structure on-chain.
USDS and DAI function as the “money” issued by Sky. Their combined circulation is more than $12 billion. Within that, USDS grew 74% in 2025 to about $9.2 billion, while sUSDS, staked USDS, has reached roughly $5.5 billion, making it the largest yield-bearing stablecoin on-chain.
Spark, Grove and Obex act as Sky’s “commercial banks,” though the protocol calls them Agents. Together they currently borrow about $5.9 billion in USDS from Sky, against a combined borrowing limit of around $17.5 billion. They pay Sky a base rate of about 3.8%.
Spark focuses on crypto lending. It is a fork of Aave V3 and had about $6.8 billion in total value locked as of April 2026, with capital deployed through protocols including Aave and Morpho.
Grove is focused on real-world assets and manages about $2.6 billion in TVL. That includes $1 billion invested in AAA-rated CLOs, with partners including BlackRock, Janus Henderson and Apollo. Obex is managed by Framework Ventures, holds about $2.5 billion in USDS and is designed to bring professional capital allocators into the Sky ecosystem.
Sky also has two additional revenue sources: USDC reserves held through Coinbase, supported by the Peg Stability Module that allows conversion between USDS and USDC, and legacy DAI crypto lending vaults.
In simple terms, Sky issues the money, the Agents earn the spread, and Sky takes a cut of that spread.
What the revenue numbers show
Sky Protocol recorded about $338 million in gross protocol revenue for full-year 2025, up about 10% from a year earlier, while operating expenses were cut by 63%. Annualized protocol profit was about $168 million.
Revenue kept rising in 2026. Gross revenue came to about $123.8 million in the first quarter and about $107.4 million in the second quarter, with Q2 up 10.5% year over year. Sky Frontier Foundation estimates full-year 2026 gross revenue at about $611.5 million, an 81% increase from the prior year.
That income flows into two main buckets.
One goes to sUSDS holders. In Q2 2026, about $53.91 million was distributed to sUSDS holders through the Sky Savings Rate, accounting for about 80% of protocol spending in the quarter.
The other goes to SKY holders. Since Smart Burn Engine launched in February 2025, the protocol has used surplus funds to buy SKY on the open market and burn it. In its first year, the program deployed about $102 million, averaging roughly $1 million a day. For full-year 2025, buybacks totaled about $96.8 million. SKY stakers are currently earning about 4.2%.
Kendrick’s valuation anchor is the value flowing to SKY holders rather than the protocol’s top-line revenue by itself.
The two-stage model behind the 5x case
The report breaks the thesis into two stages.
Stage one: the reserve buffer reaches target levels
Sky currently holds about $90 million in reserve buffer, described as aggregate backstop capital. Part of protocol revenue is retained to build that cushion further.
At the current pace, Kendrick estimates the buffer could reach $150 million in around eight months. If it also reaches the threshold of 1.5% of USDS supply, the amount available for SKY staking rewards and buybacks could double.
The report treats this as the more conservative leg of the thesis because it does not require new business lines to scale. It mostly depends on time and on the accumulation of existing income.
Stage two: Agent borrowing moves closer to capacity
Spark, Grove and Obex have a combined borrowing ceiling of $17.5 billion, versus current borrowing of about $5.9 billion. That puts utilization at roughly 34%.
If the three Agents borrow up to their limits and spreads remain unchanged, protocol revenue could increase another two to three times.
Put together, the framework is straightforward: a doubling in the share of value distributed to SKY holders, multiplied by a two- to threefold increase in revenue scale, implies a roughly four- to sixfold increase in value returned to holders. Kendrick uses the midpoint of that range and arrives at about 5x.
A key assumption in that model is that SKY staking yield stays around 4.2%. Kendrick classifies SKY as a “staking yield token,” with price moving alongside growth in rewards. If the yield rate holds steady, higher rewards can support a higher token price.
Three assumptions that could be challenged
The article notes that the logic is internally consistent, but every multiplier depends on an assumption.
Assumption one: Agent borrowing can scale to $17.5 billion
Moving from about $5.9 billion today to $17.5 billion would require close to 3x growth. That depends on Spark keeping its position in crypto lending, Grove continuing to source high-quality RWA exposure, and Obex attracting enough outside allocators.
The report also points out that DeFi lending remains highly competitive, with Aave, Morpho and Compound all in the market, while the rate environment may change. On that basis, the $17.5 billion ceiling should not be treated as automatic.
Assumption two: spreads remain stable
The roughly 3.8% base rate paid to Sky is set through governance and can be changed. If competition intensifies across stablecoins — including Ethena’s USDe, native yield on USDC or direct reserve-yield distribution by Tether — Sky may need to lower rates to keep USDS attractive.
Lower rates would directly pressure revenue.
Assumption three: revenue keeps flowing to SKY holders
In March 2026, Sky governance paused Smart Burn Engine buybacks to preserve surplus capital. That is an important detail because it shows that value returned to SKY holders is governance-driven, not fully automatic at the contract level.
If market conditions worsen, governance can choose, and already has chosen, to protect protocol assets before returning value to holders. In that framing, SKY represents a residual claim on income, not a fixed-income promise.
Kendrick also flagged what he sees as the biggest risk: “If the growth of yield-bearing stablecoins is slower than expected, this view faces its greatest risk.”
What the market needs to track on-chain
The article ends by identifying several metrics that can be checked in real time on-chain to see whether Sky is actually moving toward Standard Chartered’s target.
- Growth in USDS circulation. It is currently about $9.2 billion, and the report’s implied assumption is that it reaches about $20 billion by the end of 2028.
- The borrowing utilization of the three Agents relative to the $17.5 billion ceiling.
- Whether the reserve buffer reaches $150 million within eight months and equals 1.5% of USDS supply.
- Whether monthly Smart Burn Engine buybacks recover to a pace above roughly $1 million a day after the March pause, and whether SKY staking yield stays above 4%.
Those figures do not require investors to wait for a new bank note. The article says on-chain data and quarterly reports from Sky Frontier Foundation already provide a full path for verification.
Its final point is direct: any investment view on SKY should be built on the actual direction of those metrics, not on a broker target price alone.