Standard Chartered has initiated coverage of the DeFi platform Sky, forecasting its SKY token will rise fivefold to $0.325 by the end of 2028 from about $0.065 now. The bank's global head of digital assets research, Geoffrey Kendrick, expects growth in Sky's USDS stablecoin business to drive higher staking rewards and token buybacks for holders.
Standard Chartered forecasts a fivefold rise for SKY
Standard Chartered Bank has initiated coverage of Sky, formerly MakerDAO, forecasting that its SKY token will rise fivefold to $0.325 by the end of 2028 from about $0.065 currently. According to The Block, the bank calls Sky "DeFi's federal bank" because it issues stablecoins, sets a governance framework and charges a wholesale rate of interest to borrowers.
Sky's three main agents, Spark, Grove and Obex, have borrowed a combined $5.9 billion in USDS, Kendrick noted. They put those funds into yield strategies and pay Sky a base interest rate, currently 3.8%. Spark focuses on crypto lending through protocols such as Aave and Morpho, while Grove allocates to real-world assets from firms including BlackRock, Janus Henderson and Apollo.
Obex brings specialist capital allocators into the ecosystem. Sky also earns income from USDC held through Coinbase in its peg stability module, along with its older DAI-related lending vaults, Kendrick said.
He expects growth in the USDS stablecoin business and a larger share of income flowing to token holders through staking rewards and buybacks. Kendrick said his projections imply SKY would broadly match ether's price gains and outperform bitcoin through end-2028.
A reserve buffer and higher borrowing could lift income
Kendrick sees two stages behind his forecast. First, Sky could distribute more of its existing income once it builds a larger financial buffer. Then, more USDS borrowing could increase the income available to distribute.
Sky currently holds about $90 million in its reserve buffer, known as aggregate backstop capital, and keeps part of its income to build that reserve. At the current pace, the buffer could reach $150 million in about eight months, Kendrick estimated. If it also reaches 1.5% of outstanding USDS supply, the amount available for SKY staking rewards and buybacks could double.
Further growth could come from lending. Spark, Grove and Obex have combined borrowing limits of $17.5 billion, almost three times their current borrowings. Borrowing up to those limits could generate another two- to threefold increase in income, assuming interest spreads stay constant, Kendrick said.
The forecast also assumes SKY's staking yield, currently 4.2%, stays around that level, with Kendrick describing SKY as primarily a staking-yield token and buybacks playing a smaller role.
Kendrick continues to forecast that the overall stablecoin market will reach $2 trillion by end-2028, though he said growth in yield-bearing stablecoins such as those from Sky and Ethena is less certain. The main risk to his view, he said, would be if that growth comes in slower than expected.
Source: The Block
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