DeFi protocol $Sky posted a net loss of $5.00 million in Q1, as $USDS interest payments wiped out profits

A report released by Steakhouse Financial’s $Sky contributors shows that DeFi protocol $Sky (formerly MakerDAO) recorded a net loss of $5.00 million in the first quarter, a sharp reversal from the $31.00 million profit in Q4 last year.

The main reason for the loss was a 102% year-on-year surge in interest payments to stablecoin holders, which is directly related to its strategy of promoting the new stablecoin $USDS to replace DAI.

$Sky co-founder Rune Christensen confirmed that, in order to attract capital inflows, the $USDS savings rate was once as high as 12.5% (reduced to 4.5% in February), leading to a spike in interest expenses. Currently, the $USDS rate remains higher than $DAI, but PaperImperium, a governance liaison at blockchain research firm GFX Labs, pointed out: “$USDS has failed to create new demand; it has only caused $DAI holders who previously accepted zero interest to switch to the high-yield product.”