Galaxy Digital has placed $100 million of Sky Protocol’s yield-bearing stablecoin sUSDS on its corporate balance sheet and will accept the token as collateral across its institutional trading operation, linking one of the larger digital-asset credit desks with Sky’s onchain savings system.
The purchase, funded from Galaxy’s own balance sheet, comes as the company expands its lending relationships with several Sky ecosystem entities. Galaxy said it held nearly $2.5 billion in cash and stablecoins as of June 30, giving the firm substantial liquidity to allocate to short-duration digital assets such as sUSDS.
Clients using Galaxy’s institutional platform will be able to pledge sUSDS against loans while continuing to receive the Sky Savings Rate, the variable yield accrued by the stablecoin. In conventional finance, borrowers commonly post income-producing securities as collateral; Galaxy’s arrangement brings that structure to a tokenized dollar asset whose yield is generated onchain.
Galaxy also acquired an undisclosed amount of SKY, the governance token associated with the Sky ecosystem, according to the joint announcement.
susds enters Galaxy’s institutional collateral framework
Accepting sUSDS as collateral gives Galaxy’s institutional clients another way to finance trading or other activity without moving funds out of a yield-bearing position. A client that deposits sUSDS to secure a loan could retain exposure to the Sky Savings Rate while using the collateral to access liquidity through Galaxy.
The arrangement places particular importance on the operational controls around valuation, liquidity and collateral management. Stablecoins used in institutional lending must hold their intended dollar value under stressed conditions, while lenders need a clear process for monitoring collateral and responding if a borrower’s position weakens.
Galaxy said its institutional platform serves more than 1,600 trading counterparties and that its institutional trading operation has an average loan book of $1.4 billion. Those figures make the collateral approval more consequential than a limited pilot for a small group of onchain users: sUSDS is being incorporated into a credit business already built around sizable secured lending relationships.
The announcement did not disclose the loan-to-value ratios, margin requirements, eligible jurisdictions or client categories for sUSDS-backed borrowing. Those terms will determine how extensively the asset is used in practice, particularly among firms comparing its yield against the cost of financing through Galaxy.
Sky supply growth meets institutional credit demand
Sky reported that sUSDS supply stood at $5.52 billion at the end of the second quarter, a 149% increase from a year earlier. The rapid increase indicates growing use of the token within the Sky ecosystem, though higher supply alone does not establish whether demand is concentrated among a small number of holders or distributed across retail and institutional accounts.
sUSDS is a yield-bearing version of USDS, Sky’s stablecoin. Its savings rate can change, meaning borrowers and lenders using the token must account for yield variability rather than treating it as a fixed-rate cash instrument. That feature may appeal to treasury managers seeking a return on digital-dollar reserves, but it also makes the token’s economics dependent on Sky governance and the protocol’s revenue-generating operations.
Sky said its protocol generated $107.35 million in quarterly revenue, up 10.5% from the corresponding period a year earlier. Revenue growth can support the system’s capacity to fund incentives and savings returns, although the sustainability of those returns depends on the protocol’s assets, borrowing activity and risk management rather than on any single quarter’s result.
The companies also pointed to Sky Protocol’s B- credit rating from S&P Global, issued last year. The rating gives institutional counterparties an external reference point for assessing protocol-related credit risk, though a B- rating remains below investment grade and reflects material exposure to changing market and operational conditions.
Existing relationships extend beyond the treasury purchase
Galaxy’s sUSDS allocation builds on several financing arrangements already linking the company to Sky-related entities. Grove, a prime agent in the Sky ecosystem, provides Galaxy with a $500 million warehouse facility for institutional loans secured by digital assets. A warehouse facility generally supplies committed funding that a lender can use to originate or hold loans before refinancing or distributing them.
Grove also anchored Galaxy’s $75 million tokenized collateralized loan obligation in January with a $50 million allocation. That transaction put a large Sky-linked commitment behind a structured credit product represented on blockchain infrastructure.
Galaxy has separately borrowed through Spark, a Sky capital allocator, to support the Galaxy Onchain Financing Rate, or GOFR. Launched in July, GOFR draws on lending protocols including Aave, Morpho, Spark and Kamino to calculate a blended borrowing rate. The benchmark is designed to reflect borrowing conditions across several major onchain credit venues rather than relying on one platform’s lending market.
Galaxy, Sky and Grove have now structured a new tri-party borrowing arrangement, according to the announcement. The companies are also discussing an expansion of Grove’s existing $500 million warehouse facility, although they did not provide a proposed size or timeline.
Taken together, the deals move the relationship beyond a corporate treasury allocation. Sky-linked capital is increasingly supporting Galaxy’s lending infrastructure, while Galaxy is creating institutional channels for sUSDS to be held, financed and reused as collateral. The arrangement could increase demand for the stablecoin among professional market participants if Galaxy’s clients find its savings yield and borrowing terms competitive with other forms of dollar collateral.
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