DeFi protocol Sky suffered a net loss of $5 million in the first quarter, as profit was wiped out by USDS interest payments

According to CoinDesk, a report released by Sky contributors at Steakhouse Financial shows that DeFi protocol Sky (formerly MakerDAO) had a net loss of $5 million in the first quarter, a significant reversal from a profit of $31 million in the fourth quarter of last year. The main reason for the loss is the 102% year-on-year increase 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 as high as 12.5% (dropped to 4.5% in February), leading to a surge in interest expenses. At present, the USDS interest rate is still higher than DAI, but PaperImperium, the governance liaison of blockchain research company GFX Labs, pointed out:; The USDS failed to create new demand and only caused DAI holders who originally accepted zero interest to switch to high interest products. & 34; Launching USDS is Sky&34; Final Plan&34; The core initiative aims to create a more compliant institutional level stablecoin. Although the total supply of USDS and DAI increased by 57% this quarter, it mainly came from the $450 million pledged funds of Ethena, a synthetic dollar agreement. It is worth noting that Ethena has recently converted some of its reserves from USDS to USDtb supported by BlackRock, which may alleviate Sky's interest burden.