Sky reported more than $4.4 billion in aggregate PSM liquidity, but that figure does not guarantee USDC on a holder's route or access to an eligible bank-redemption service.
Converting USDS through Sky's Peg Stability Module gets a holder USDC, not dollars in a bank account. A cash-out also depends on available USDC along the conversion route and access to an eligible service that can send bank dollars.
Sky.money reported more than $4.4 billion in aggregate stablecoin liquidity in its PSM on Oct. 9. That figure describes the module's overall liquidity, not a guaranteed USDC balance for every withdrawal at every moment. A holder's conversion depends on inventory along the specific route when the transaction takes place.
Sky's October explanation described a direct one-for-one USDS-to-USDC conversion with no protocol swap fee or slippage under the stated settings. Trading USDS through other token pools can still bring separate pricing, liquidity limits and fees. Those distinctions matter when a holder needs a particular asset rather than an aggregate measure of protocol liquidity.
By Oct. 6, Sky had also reported about $1.6 billion in cumulative USDC-USDS volume through Uniswap routing. The integration began on July 8. Cumulative volume can include repeated swaps and activity in both directions; it does not show net issuance or an equivalent amount of new dollars entering crypto.
Sky grew out of MakerDAO's September 2024 rebrand. The transition introduced USDS and let holders voluntarily convert DAI to USDS, while DAI continued to circulate. The governance token MKR was also converted to SKY, leaving the two stablecoins within the same ecosystem. On Oct. 7, CoinStats data cited in an industry report put USDS market capitalization at about $10.2 billion. That valuation measures the token supply and its market value, not bank dollars available for immediate withdrawal.
Token counts can change without matching bank-dollar deposits. Sky's developer documentation says DAI and USDS share an issuance source and can be converted in either direction without liquidity restrictions through a separate Ethereum converter. That feature covers DAI-USDS conversion, not USDC inventory in the PSM. A rise in USDS alone may reflect a change in denomination; assessing the wider system requires tracking DAI as well.
Borrowing creates a different kind of token supply. In USDD's collateral-backed vault, a user deposits collateral and mints USDD debt, then repays the tokens plus stability fees to release the collateral. The user can also withdraw collateral while maintaining sufficient coverage. Those tokens provide spendable liquidity against pledged assets, with a repayment obligation. They do not each correspond to a new bank-dollar deposit.
USDD's migration from USDDOLD can raise the count of the new token without adding an equivalent new holding. Holders can exchange legacy tokens for an equivalent amount of USDD, paying network gas; there is no deadline. Supply comparisons therefore need consistent measurement times and clear treatment of legacy tokens. They also need to account for collateral backing other tokens.
USDD's PSM instructions show why inventory on each route matters. The mechanism offers one-for-one conversion between USDD and supported stablecoins without a service fee, though network gas still applies. Users must check how much of the target token is available for a swap. A holder seeking USDT needs a route with USDT inventory; the total valuation of collateral cannot replace that balance. Collateral securing debt is not automatically uncommitted redemption cash.
The figures measure different activity. Sky reported more than $4.4 billion in aggregate PSM stablecoin liquidity on Oct. 9. Its reported $1.6 billion in Uniswap-routed USDC-USDS volume was cumulative through Oct. 6, after the routing integration began July 8. Separately, Circle's MiCA policy for eligible EEA retail redemptions sets a five-business-day timeframe unless discrepancies arise.
On Oct. 8, Moody's assigned Sky a B3 rating, its first assessment of the credit risk of a DeFi protocol issuing stablecoins. The rating applies to the Sky protocol, not to USDS or sUSDS individually. B3 is five notches below investment grade. Moody's cited about $90 million in capital against roughly $10 billion in assets under management, a ratio of approximately 0.9%. Exame reported that the agency assessed operational and governance risks. Its review also covered legal and regulatory risks, along with liquidity.
Receiving USDC still does not put bank dollars in a holder's account. Circle says eligible businesses can deposit dollars into Circle accounts to obtain newly minted USDC. Returning USDC for dollars removes redeemed tokens from circulation. Circle says most of its reserves are invested in the Circle Reserve Fund, which can hold short-dated Treasuries and overnight Treasury repurchase agreements. The fund can also hold cash. An exchange purchase may use USDC already held by the exchange; Circle says an exchange may request newly minted tokens when it needs more inventory. Circle Mint is not available to individuals and small businesses through that institutional service.
For eligible retail holders in the European Economic Area, Circle France offers a separate direct redemption route under Circle's MiCA policy, last updated Sept. 15. The policy requires eligibility and identity checks, as well as transaction checks. A USDC redemption also requires an EEA bank account able to accept USD. Circle can defer redemptions during a stress event that prevents reserves from being rebalanced between Circle France and Circle LLC. The EEA policy is not a general redemption promise for USDS holders, nor does it state that every U.S. user can access the same route. A previous Europe reserve report covered proposals concerning stablecoin issuers' commercial-bank deposits, a separate issue from the route a holder uses to redeem tokens.
A stablecoin swap moves value between token forms or holders; it does not establish by itself that fresh dollars entered the system. Issuance against collateral can add spendable tokens while creating debt. Migration can replace one token with another without changing the holder's underlying position. Redemption follows the issuer's terms and depends on banking arrangements and user eligibility.
