Sky Abandons Static Vaults For Allocator Architecture

That price resilience mirrors what is happening underneath.

For those who have tracked the space, Sky's current momentum is the culmination of a massive structural transition. The protocol is the rebranded iteration of MakerDAO, the pioneering decentralized finance project founded by Rune Christensen. The transformation into Sky was driven by Christensen’s long-standing "Endgame" plan, an overhaul designed to scale the protocol's stablecoin supply by aggressively integrating real-world assets and restructuring governance into specialized units. The shift from static vaults to dynamic allocators directly aligns with his persistent calls to build a resilient, revenue-generating powerhouse that can weather broader market contractions.

Sky closed the year with a surge in its flagship yield-bearing stablecoin, USDS. Supply expanded 287.1% over twelve months, from $1.34bn to $5.20bn by year-end. Including DAI, total stablecoin supply across the SKY ecosystem rose roughly 73%, from $5.31bn to $9.19bn.

Momentum has carried into the new year. Year-to-date, USDS is up another 14.1% on a standalone basis and 7.6% when accounting for DAI. Combined supply now sits just below the $10bn threshold.

More importantly, USDS has overtaken Aave’s USDC/USDT markets and Ethena’s flagship stablecoin to claim the top spot in DeFi money market deposits, marking a clear shift in capital preference.

(Source: Token Terminal, Sky)

USDS is increasingly treated as the safest-yielding dollar on mainnet backed by a strong balance sheet. It effectively becomes a capital sink for DeFi, absorbing liquidity at scale while broader markets contract.

The growth of its stablecoin base and the rollout of the Sky Agent network (a set of balance sheet allocators routing capital across lending, RWAs and liquidity modules) allowed the protocol to generate $338mn in gross revenue. This is up 10% year on year, with management guiding for a higher bar this year.

Sky begins the year at full speed

Monthly revenue from stability fees just printed an all-time high, and the month is not even finished. So far, the protocol has generated $52.65mn, led overwhelmingly by money market activity, which accounts for 77% of the total. That translates to $40.5mn from the money-market engine alone, nearly doubling the record of $25.7mn previously set in December 2024.

(Source: Steakhouse Financial, Dune Analytics)

The Peg Stability Module (PSM) is the second pillar. It acts as the system’s conversion desk, allowing users to swap external stablecoins such as USDC into USDS at near parity. It anchors the peg by absorbing inflows and releasing supply when needed.

Revenue is generated through embedded spreads and yield earned on reserves held within the module. In practical terms, the PSM monetizes primary issuance flows while reinforcing price stability, a stabilizer that paid roughly $31.1mn year-to-date.

Together, money markets and the PSM account for the overwhelming majority of Sky’s revenue. As USDS supply expands, balance sheet use rises, and more deposits translate into deeper lending activity, tighter spreads and higher aggregate fee capture.

On the liability side, sUSDS continues to scale as capital flows into the Sky Savings Rate (SSR). Supply has now crossed the $5bn threshold and remains the largest yield-bearing stablecoin deposit venue in DeFi, holding the top position since overtaking Ethena’s sUSDe following its depeg-driven outflows. Year-to-date, sUSDS is up 31.6%.

That growth outpaces even Maple’s SYRUP best-in-class yields, which have expanded 25% year to date despite offering higher headline returns. Notably, parts of the Sky ecosystem are themselves exposed to those external yield venues through deployed collateral, yet depositors are choosing to stay inside the Sky balance sheet.

The appeal is not just the headline yield but its composition. Returns are sourced from a diversified mix of onchain lending activity and real-world asset exposure, limiting dependence on any single revenue stream. This is a diversification actively engineered through the Star Agents network.

Sky agents as balance sheet expansion tools

Sky’s asset base is closing in on $10bn. It stood at $6.76bn in January 2025. It now sits at $9.99bn, marking a 47.8% expansion over the past year.

At the start of 2025, Star Vaults, the vehicles powering Sky Agents, represented just 5.6% of assets. They now account for 62.1%, roughly $6.21bn. In less than a year, the centre of gravity shifted.

Crypto-backed loans, once the backbone of the system, have faded. Exposure has fallen from $3.24bn in December 2024 to $0.65bn. RWA vaults have also receded as standalone categories. A new architecture, rather than a new asset class, has replaced them.

Capital is now routed through allocators rather than siloed vault types.

Sky Capital Allocators operate as mandate-driven sleeves embedded inside the protocol. They deploy USDS across lending markets, liquidity layers and institutional RWA strategies within predefined exposure caps and capital constraints, operating as a genuine in-house asset management desk.

Management has outlined plans to launch up to ten additional Sky Agents over the course of the year, beginning in the first quarter. Each new agent represents a dedicated mandate, creating a new distribution channel for USDS liquidity and a new revenue sleeve inside the balance sheet.

By embedding capital across multiple verticals and protocols, Sky extends its footprint beyond what a single monolithic vault system could achieve. Product distribution scales horizontally, and market share becomes a function of integrations rather than issuance alone.

(Source: Steakhouse Financial, Dune Analytics)

Instead of siloed vault types, capital is now routed through allocators. 

Sky Capital Allocators operate as mandate-driven sleeves embedded inside the protocol. They deploy USDS across lending markets, liquidity layers and institutional RWA strategies within predefined exposure caps and capital constraints – a genuine in-house asset management desk. 

Management has outlined plans to launch up to ten additional Sky Agents over the course of the year, beginning in Q1. Each new agent represents a dedicated mandate,  a new distribution channel for USDS liquidity, and a new revenue sleeve inside the balance sheet. 

By embedding capital across multiple verticals and protocols, Sky extends its footprint beyond what a single monolithic vault system could achieve. Product distribution scales horizontally, and market share becomes a function of integrations rather than issuance alone. 

(Source: Steakhouse Financial, Dune Analytics)

Over the past year, Sky’s capital exposure has decisively shifted towards Star Agents.

The Spark Liquidity Layer (SLL), one of Spark’s core products, accounts for $3.33bn (30.9% of total Sky’s exposure), which is nearly equivalent to the protocol’s $3.77bn direct stablecoin exposure.

SLL functions as an automated liquidity deployment framework. It mints USDS and sUSDS through Star Vaults and programmatically allocates that liquidity across different networks and venues. This includes SparkLend, the Spark Aave-like lending arm, PYUSD integrations and institutional pools such as Maple.

Rather than operating as a standalone lending market, it acts as a routing layer, channelling balance sheet capital towards yield-bearing opportunities under predefined risk constraints.

Spark’s exposure is backed primarily by ETH-linked collateral and top-tier stablecoins, assets that are among the most liquid in the market. Under current risk parameters, a 50% drawdown in collateral prices would place roughly 10% of deposited assets, or about $334mn, into liquidation range.

As of today, Spark generates an estimated $105.98mn annualized. Yet its yield per dollar of exposure has compressed sharply, from roughly 12% at peak to just above 3% as scale increased, behaving like a floating-rate desk resetting with market conditions.

Grove, the second-largest allocator, carries $2.29bn of exposure (21.4% of the system) with a completely different risk profile.

Its exposure leans heavily towards US Treasury bills and tokenized money market funds via Centrifuge and BlackRock, alongside institutional credit allocations including Aave Horizon’s RWA strategies. The income stream is steadier, duration-driven and far less sensitive to onchain rate volatility.

At current metrics, Grove generates roughly $96mn in annualized revenue.

(Source: Steakhouse Financial, Dune Analytics)

Taken together, Spark and Grove form the economic core of the system, accounting for 45.5% of Sky’s annualized revenue base of roughly $444mn.

That revenue is what funds the Sky Savings Rate.

Yield paid on USDS is not manufactured through incentives. It is sourced from asset-side income, such as lending spreads captured via Spark, Treasury and money market exposure through Grove and liquidity deployment across integrated venues. The savings rate is therefore a function of balance sheet performance.

Scale brings exposure

An expanding balance sheet increases both revenue and exposure.

As Sky’s asset base approaches $10bn and allocator mandates grow, the system’s Capital at Risk becomes the relevant metric. In simple terms, Capital at Risk represents the portion of risk-weighted exposure that could translate into losses under stressed conditions, after accounting for collateral buffers, risk weights and structural protections.

Banks operate under the same logic. They hold surplus capital against probabilistic losses such as credit defaults, liquidity shocks and counterparty failures. The framework is similar here, even if the assets differ.

From a credit and counterparty standpoint, Sky is exposed across multiple dimensions, especially with the expansion of Sky Agents.

(Source: Steakhouse Financial, Dune Analytics)

As capital shifted towards the latter, risk migrated with it. Where the system was once concentrated in crypto-backed vaults, risk is now dominated by allocator sleeves, primarily Spark and Grove. Together, they account for roughly 66.1% of total Capital at Risk: approximately $99.1mn attributed to Spark and $68.57mn to Grove out of $253.81mn system-wide.

While Spark and Grove dominate roughly half of exposure and revenue, their share of Capital at Risk is even more pronounced relative to the system’s residual sleeves. The allocator model now anchors not only income generation but also solvency sensitivity.

Meanwhile, the implied risk capital ratio remains contained. Both Spark and Grove operate around a 3% Capital-at-Risk-to-exposure ratio. The framework appears calibrated, but calibration is conditional on liquidity and correlation assumptions holding. That sensitivity will matter in a broad market shock.

In theory, the first line of defence is the surplus buffer, which comprises accumulated retained earnings held by the protocol to absorb losses before any structural backstop is triggered.

Today, that buffer stands at roughly $59mn. Relative to $253.81mn in modelled Capital at Risk, coverage is meaningful but not exhaustive. The design assumes diversification and staggered stress rather than simultaneous impairment across core allocators.

That makes earnings retention and risk calibration central to the system’s resilience.

What comes next

Sky today looks less like a traditional overcollateralized stablecoin protocol and more like a structured balance sheet with a token attached.

Revenue is diversified. Yield is asset-backed. Distribution is modular. Star Agents have transformed the architecture from static vault issuance into active capital allocation.

However, the trade-off for scale here is concentration. Spark and Grove now anchor both earnings and solvency sensitivity.

One additional variable sits in the background: Aave. Sky’s exposure to Aave-linked infrastructure, both through Spark’s lending integrations and USDS distribution channels, creates a degree of reliance on an external liquidity layer. With governance tensions resurfacing around BDG Labs - one of the core development team - exit and structural shifts within Aave’s ecosystem, that relationship remains a strategic lever as much as a potential vulnerability.

For now, the framework appears disciplined. Risk weights are contained, collateral is high quality, and liquidity assumptions remain intact. The durability of Sky's position will depend on whether its balance sheet discipline compounds as fast as its supply.