Standard Chartered Bank believes income-based stablecoins will drive Sky to achieve five-fold growth

Standard Chartered Bank: Interest bearing stablecoins will become the core of the next phase of growth, and SKY tokens are expected to rise fivefold by the end of 2028.

Standard Chartered Bank predicts that the next major phase of stablecoins growth will come from income-generating tokens. The bank predicts that as the USDS stablecoin ecosystem expands, the price of Sky (SKY) tokens may rise about fivefold by the end of 2028.

In a research report released on September 11, Geoff Kendrick, global head of digital asset research at Standard Chartered Bank, launched an coverage rating on SKY, with a target price set at US$0.325 at the end of 2028, which is a significant increase compared with the price of approximately US$0.065 at the time of the report's release. Banks expect the increase to broadly follow Ethereum's earnings performance and outperform Bitcoin over the same period.

The core logic behind this forecast lies in the expected expansion of the stablecoin market. Standard Chartered Bank predicts that the overall stablecoin market size may reach US$2 trillion by the end of 2028. However, Kendrick said it is still difficult to predict how much of this will ultimately be made up of interest-earning products.

This distinction has become increasingly important as financial institutions move deeper into the tokenized currency space. A consortium of 21 banks, including Goldman Sachs, Bank of America, Citigroup and Deutsche Bank, plans to launch stablecoins pegged to the US dollar in 2027; Standard Chartered Bank itself has begun promoting stablecoins pegged to the Hong Kong dollar through its joint venture Anchorpoint.

Sky converts stablecoin liquidity into revenue business

Sky (formerly known as MakerDAO) built its business model around USDS stablecoins and sUSDS with revenue attributes. Standard Chartered Bank describes the ecosystem as something similar to a decentralized banking system: Sky issues stablecoins, sets governance rules, and provides funds to agents at wholesale rates.

These agents borrow USDS and deploy the funds into different revenue strategies. The report shows that the three major agents Spark, Grove and Obex held a combined USDS loan line of US$5.9 billion at the time of the report's release.

This structure allows Sky to convert growth in stablecoin supply into revenue in a relatively straightforward manner. Banks believe that an increase in outstanding USDS loans will boost net interest income, a portion of which ultimately flows to SKY holders through pledge incentives and token buybacks.

Sky's own data also shows the size of the living parts of its ecosystem. Its financial dashboard recently showed that approximately US$4.94 billion was deposited in USDS savings products, while its sUSDS products currently mark variable yields.

Questions about the US$2 trillion stablecoin market

The more decisive question is: Will stablecoins evolve from a "digital dollar" mainly used for payments and transactions to a financial instrument capable of generating income?

Currently, the largest stablecoins such as USDT and USDC do not allocate reserve gains directly to holders. Earn-earning products take a different path, allowing users to earn returns while maintaining exposure to dollar-denominated assets.

Standard Chartered Bank pointed out that as the use of stablecoins expands, the two models may gradually diverge, but also admitted that the final market share division is difficult to predict. This uncertainty is critical because interest-bearing stablecoins still account for a small share of the overall stablecoin market. Therefore, Sky not only needs to grow the stablecoin market itself, but also needs interest-earning products to account for a larger share of growth.

This timing also puts Sky in a broader competition for the role of stablecoins in future financial markets. Banks are exploring their own stablecoins, while traditional asset managers have participated in tokenized treasury bonds and real-world asset (RWA) strategies used in the Sky ecosystem.

Sky said that more than $5.5 billion has been deployed through its agents to tools and platforms involving companies such as BlackRock, Janus Henderson, Anchorage and Securitize.

USDS lending is key to Sky's continued expansion

Standard Chartered Bank's five-fold growth forecast relies heavily on Sky to expand USDS liquidity in its agent network. Spark, Grove and Obex currently have a combined borrowing cap of $17.5 billion, compared with existing borrowing of $5.9 billion. Kendrick estimates that, assuming spreads remain relatively stable, reaching these caps could bring another two to three times growth.

He expects that these caps may be increased in the future or new agents will be added. However, this also leaves clear constraints on the argument. While Sky has demonstrated the scalability of its proxy model, Standard Chartered itself has said further significant expansion has not yet been verified. The bank also warned that demand for USDS and other interest-bearing stablecoins will ultimately depend on the development of stablecoin application scenarios.

The economic characteristics of this model are different from those of a pure token repurchase story. Standard Chartered estimates that most of the value returned to SKY holders comes from pledge proceeds rather than token destruction. Under the current structure, 45% of the distributable income is used for SKY pledger rewards and 10% is used for SKY token repurchase.

The real bet lies in the next stablecoin cycle

Therefore, Standard Chartered Bank's forecast for SKY is not only an independent judgment on a single DeFi token, but also a bet on the structure of the next stablecoin cycle. Banks predict that the value flowing to SKY holders could increase approximately fivefold by the end of 2028, driven by the growth of the Sky ecosystem and the expansion of the outstanding USDS.