Written by: Xiaobing

Geoffrey Kendrick, the global digital asset research director at Standard Chartered Bank, covered Sky (formerly MakerDAO) for the first time on September 11, giving a target price of $0.325 for the SKY token by the end of 2028, approximately five times the current price of $0.065.

The core judgment of the report is: The value return for SKY holders will grow to five times the current level by the end of 2028, driven by the expansion of the Sky ecosystem and the increase in the circulation of USDS.

Five times pricing, where does the confidence come from?

Understanding Sky as a bank

Kendrick positioned Sky as: "The federal bank of DeFi."

This metaphor is very effective for understanding Sky's business model.

In the traditional financial system, central banks issue currency, set benchmark interest rates, and provide funding to commercial banks at wholesale prices. After commercial banks receive the funds, they decide where to invest the money to earn interest spreads.

The structure of Sky is almost a mapping of this model on the blockchain.

USDS and DAI are the "currencies" issued by Sky. The combined circulation exceeds $12 billion, with USDS expected to grow by 74% to approximately $9.2 billion by 2025, while sUSDS (staked USDS) has become the largest yield-generating stablecoin on the chain with about $5.5 billion.

Spark, Grove, and Obex are Sky's "commercial banks" (officially called Agents). They borrow USDS from Sky, currently totaling about $5.9 billion, with a combined borrowing limit of about $17.5 billion. They pay Sky an interest rate of about 3.8%.

Spark focuses on crypto lending and is a fork of Aave V3, with a TVL of about $6.8 billion (April 2026 data), deploying funds through protocols like Aave and Morpho.

Grove focuses on real-world assets, managing a TVL of about $2.6 billion, including $1 billion invested in AAA-rated CLOs (collateralized loan obligations), with partners including BlackRock, Janus Henderson, and Apollo. Obex is managed by Framework Ventures, holding about $2.5 billion in USDS and introducing professional capital allocators into the Sky ecosystem.

Sky also generates income from two additional sources: through USDC reserves held by Coinbase (the anchored stability module PSM allows for exchange between USDS and USDC), and the existing DAI crypto lending vault.

Sky prints money, Agents earn interest spreads, and Sky takes a cut from the spreads.

Income figures

For the full year of 2025, Sky Protocol recorded approximately $338 million in total protocol revenue, a year-on-year increase of about 10%, while operating expenses were reduced by 63%. The annualized protocol profit is about $168 million. In Q1 2026, the total revenue for the quarter is about $123.8 million. Q2 2026 total revenue is about $107.4 million, a year-on-year increase of 10.5%.

The Sky Frontier Foundation estimates the total revenue for 2026 at about $611.5 million, a year-on-year increase of 81%.

These revenues flow into two pockets.

One is for sUSDS holders. In Q2 2026, approximately $53.91 million was allocated to sUSDS holders through the Sky Savings Rate, accounting for about 80% of the season's protocol expenses.

The other is for SKY holders. Since the launch of the Smart Burn Engine in February 2025, it has used protocol surplus to buy back and destroy SKY on the open market, deploying about $102 million in the first year (approximately $1 million daily). The total buyback for 2025 is about $96.8 million. The current yield for SKY stakers is about 4.2%.

Kendrick's five times valuation is anchored in the value flowing to SKY holders.

Where the five times comes from: Two-phase growth model

Kendrick's deduction is divided into two phases.

Phase One: Reserve buffer reaches standard, allocation ratio increases.

Sky currently holds about $90 million in reserve buffer (aggregate backstop capital), and the protocol retains a portion of its revenue to strengthen this buffer. At the current pace, Kendrick estimates the buffer will reach approximately $150 million within eight months. If it simultaneously meets the capital ratio threshold of 1.5% of USDS circulation, the funds for SKY staking rewards and buybacks could potentially double.

This is a conservative judgment. It does not rely on new business growth, only on the passage of time and the natural accumulation of existing revenue.

Phase Two: Agent borrowing limit is maxed out, revenue scale jumps.

The combined borrowing limit of Spark, Grove, and Obex is $17.5 billion, while the current actual borrowing is $5.9 billion, with a utilization rate of about 34%. If the three major Agents borrow to their limit, under the assumption of unchanged interest spreads, revenue could increase two to three times.

Two phases combined: Allocation ratio doubles × Revenue scale increases by 2-3 times ≈ Value growth for SKY holders of about 4-6 times. Taking the average value gives about five times.

The key assumption of this model is that the staking yield of SKY remains at about 4.2%. Kendrick characterizes SKY as a "staking yield token," with its price rising alongside yield growth. Under constant yield conditions, higher rewards support a higher token price.

Three assumptions to challenge

Standard Chartered's model logic is closed, but each multiplier is based on assumptions.

Assumption One: Agents can max out borrowing at $17.5 billion.

Current borrowing of $5.9 billion needs to grow about threefold to reach $17.5 billion. This depends on whether Spark can maintain a share in the crypto lending market, whether Grove can continuously find high-quality RWA targets, and whether Obex can attract enough external allocators. Given the highly competitive nature of the DeFi lending market (Aave, Morpho, Compound) and the potential changes in interest rate environment, $17.5 billion is not guaranteed.

Assumption Two: Interest spreads remain stable.

The 3.8% base interest rate is set by Sky governance and can be adjusted at any time. If competition in the stablecoin market intensifies (such as Ethena's USDe, native yield for USDC, and Tether's reserve yield distributed directly), Sky may need to lower interest rates to maintain the attractiveness of USDS. Compressing interest rates directly compresses revenue.

Assumption Three: Revenue continues to flow to SKY holders.

In March 2026, Sky governance once paused the buyback operations of the Smart Burn Engine to preserve surplus. This indicates that the value return to SKY holders is driven by governance decisions rather than automatically executed by contracts. When market conditions deteriorate, governance can (and has) chosen to prioritize preserving protocol assets rather than returning value to holders. SKY is a potential claim on residual income, not a fixed income commitment.

Kendrick himself pointed out the core risk: "If the growth of yield-generating stablecoins is slower than expected, this judgment faces the greatest risk."

Key metrics to track

The determination of whether SKY can meet Standard Chartered's expectations lies in several numbers that can be verified on-chain in real-time:

Growth rate of USDS circulation (currently about $9.2 billion, with Standard Chartered implicitly assuming it reaches about $20 billion by the end of 2028);

Utilization rate changes of the actual borrowing amounts of the three major Agents compared to the borrowing limit of $17.5 billion;

Whether the reserve buffer reaches $150 million within eight months and accounts for 1.5% of USDS;

Whether the monthly buyback amount of the Smart Burn Engine recovers to an average of over $1 million (the recovery situation after the pause in March) and whether the SKY staking yield maintains above 4%.

These numbers do not need to wait for Standard Chartered's updated report; on-chain data and the quarterly report from Sky Frontier Foundation provide a complete verification path.

Investment judgments should be based on the actual trends of these indicators, not on any brokerage firm's target price.